Nokia 2011 Annual Report Download - page 158

Components of Executive Compensation
Our compensation program for executive officers includes annual cash compensation in the form of a
base salary and short-term cash incentives as well as long-term equity-based incentive awards in the
form of performance shares, stock options and restricted shares.
Annual Cash Compensation
Base salaries are targeted at globally competitive market levels. The Personnel Committee evaluates and
weighs as a whole the appropriate salary levels based on both our US and European peer companies.
Short-term cash incentives are an important element of our variable pay programs and are tied directly
to Nokia’s and the individual executives’ performance. The short-term cash incentive opportunity is
expressed as a percentage of each executive officer’s annual base salary. These award opportunities
and measurement criteria are presented in the table below.
Short-term incentives are determined for each executive based on their performance as measured on
an individual scorecard. Measurement criteria for the scorecard include a common set of objectives
and targets shared by all Nokia Leadership Team members related to the change in strategy, individual
strategic objectives for each executive officer and Business Unit-specific key operative targets which
consist of key financial targets, key delivery milestones (products and services) and other key
performance indicators such as quality and customer satisfaction. A broad range of sustainability and
competitive factors are also taken into consideration when assessing an executive’s performance. The
measures to be included in the scorecard for each executive and the specific targets require the
Personnel Committee’s approval with respect to the members of the Nokia Leadership Team, and the
Board’s approval with respect to the President and CEO.
The following table reflects the measurement criteria that are established for the President and CEO
and members of the Nokia Leadership Team and the relative weighting of each component for the year
2011. The short-term incentive payout is based on performance relative to targets set for each
measurement criteria listed in the table and includes a comparison of each executive officer’s individual
performance to his/her predefined scorecard objectives and targets.
Short-Term Incentive as a % of Annual Base Salary in 2011
Position
Minimum
Performance
Target
Performance
Maximum
Performance Measurement Criteria
President and
CEO ....... 0% 100% 225% (a) Shared Strategic Change Goals applicable to
all Nokia Leadership Team members (including but
not limited to targets for Nokia’s product and
service portfolio, partnerships and organizational
performance)
(b) Individual Strategic / Change Goals(1)
(c) Key Operative Targets (including net sales,
operating profit and gross margin)
Total ....... 0% 100% 225%
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