Nokia 2012 Annual Report Download - page 146

measures that were defined. As a result, under our executive compensation programs, the President
and CEO and the members of the Nokia Leadership Team have not realized significant elements of
their pay over this past year.
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 the
strategy announced in early 2011. Specifically, our programs are designed to:
• incorporate specific measures that align directly with the execution of our strategy;
• 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 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
directly for 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 Committee has reviewed and established that 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. All compensation for the President and CEO, including long-term equity incentives, is approved
by the Board and 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.
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