Nokia 2013 Annual Report Download - page 110

NOKIA IN 2013
108
CORPORATE GOVERNANCE
General Meeting of
Shareholders
External
Auditor
Internal
Audit
Board of Directors
Audit Comittee
CG & Nomination Comittee
Personnel Comittee
Nokia Group Leadership
Team
President & CEO
This Corporate Governance statement is prepared in accord-
ance with Chapter , Section  of the Finnish Securities Markets
Act and the recommendation  of the  Finnish Corporate
Governance Code and is issued separately from the review by
the Board of Directors. The review by the Board of Directors
 is available on page  of the ‘Nokia in ’ publication.
REGULATORY FRAMEWORK
Nokia’s corporate governance practices comply with Finnish
laws and regulations as well as with Nokia’s Articles of Associa-
tion. Nokia also complies with the Finnish Corporate Govern-
ance Code, available at www.cgfi nland.fi , with the following
exceptions:
In  Nokia was not in full compliance with recommenda-
tion  of the Finnish Corporate Governance Code as Nokia’s
Restricted Share Plans did not include any performance
criteria but were time-based only, with a restriction period
of at least three years from the grant. Restricted Shares are
granted only for exceptional retention and recruitment pur-
poses aimed to ensure Nokia is able to retain and recruit talent
vital to the future success of the Company. In the Restricted
Share Plan , the number of the shares to be granted was
reduced signifi cantly and they no longer are part of the annual
grants.
In  Nokia was not in full compliance with the recom-
mendation  of the  Finnish Corporate Governance Code
as the termination payment payable due to the termination
of Nokia’s former President and CEO Stephen Elop’s service
contract exceeded the aggregate amount of his non-variable
salary of two years. While we decide on our executives’ total
compensation through benchmarking against similar compa-
nies, along with other factors, the company’s approach has
been to keep the non-variable part rather small in proportion
and emphasize the variable part. This compensation structure
is designed to align the interest of executive offi cers with
those of the shareholders and with Nokia’s performance. The
termination payment was also signifi cantly aff ected by the
share price increase from the announcement of the trans-
action with Microsoft through the termination of Mr. Elop’s
contract, as over % of the termination payment consisted
of the value of his equity-based compensation. Moreover,
in the end % of this termination payment was borne by
Microsoft and the remaining % of the amount, equaling to
EUR , million, by Nokia pursuant to the agreement between
Nokia and Microsoft.
As a result of Nokia’s listing of its shares on the New York
Stock Exchange and its registration under the US Securities
Exchange Act of , Nokia must comply with the US federal
securities laws and regulations, including the Sarbanes-Oxley
Act of  as well as the requirements of the New York Stock
Exchange, in particular the corporate governance rules under
Section A of the New York Stock Exchange Listed Company
Manual, which is available at http://nysemanual.nyse.com/
lcm/. Nokia complies with the above rules in each case to the
extent that those provisions are applicable to foreign private
issuers. Nokia also complies with any other mandatory corpo-
rate governance rules applicable due to listing of Nokia share
in Helsinki and New York stock exchanges.
To the extent any non-domestic rules and regulations would
require a violation of the laws of Finland, Nokia is obliged to
comply with the Finnish requirements. Nevertheless, Nokia
aims to minimize the necessity for, or consequences of,
confl icts between the laws of Finland and applicable non-
domestic requirements.
MAIN CORPORATE GOVERNANCE BODIES
OF NOKIA
Pursuant to the provisions of the Finnish Limited Liability
Companies Act and Nokia’s Articles of Association, the control
and management of Nokia is divided among the shareholders
at a general meeting, the Board of Directors (the “Board”),
the President and CEO and the Nokia Group Leadership Team,
chaired by the President and CEO.
General Meeting of Shareholders
The shareholders may exercise their decision-making power
and their right to speak and ask questions at the general
meeting of shareholders. Each Nokia share entitles a share-
holder to one vote at general meetings of Nokia. Pursuant to
the Finnish Limited Liability Companies Act, an Annual General
Meeting must be convened each year by June . The Annual
General Meeting decides, among other things, on the election
and remuneration of the Board of Directors, the adoption of
annual accounts, the use of the profi t shown on the balance
sheet, discharging from liability the members of the Board and
the President and CEO as well as on the election and fees of
external auditor.
In addition to the Annual General Meeting, an Extraordinary
General Meeting shall be convened when the Board considers
such meeting to be necessary, or, when the provisions of the
Finnish Limited Liability Companies Act mandate that such a
meeting must be held.
The Board of Directors
The operations of Nokia are managed under the direction of
the Board of Directors, within the framework set by the Finnish
Limited Liability Companies Act and our Articles of Association
as well as any complementary rules of procedure as defi ned by
the Board, such as the Corporate Governance Guidelines and
related Board Committee charters.