Nokia 2013 Annual Report Download - page 124

NOKIA IN 2013
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of the Sale of D&S Business to Microsoft, in the second half of
, the team scorecard was modifi ed to include individual
targets related to the Sale of D&S Business for some Nokia
Leadership Team members. Some members of the Nokia
Leadership Team also have an objective based on relative Total
Shareholder Return. For , the payment with respect to
relative Total Shareholder Return is based on the Personnel
Committee’s assessment of Nokia’s total shareholder return
compared to key peer group companies that are selected by
the Personnel Committee in the high technology, Internet ser-
Short-term incentive as a % of annual base salary in 
Minimum Target Maximum
Position performance performance performance Measurementcriteria
Presidentand CEO 0% 125% 250% Key fi nancial targets 1 (including gross
profi t, OPEX and net cash fl ow); and
Nokia Leadership Team 0% 75% 150% Strategic objectives 1 (including targets
for performance of Nokia’s product and
service portfolio); and Individual
objectives (includes targets relating to
the transition of the Devices & Services
business to Microsoft)
Certain Nokia Leadership Team members
(in addition to above) 0% 25% 50% Total shareholder return 2 (comparison
made with key competitors in the high
technology, telecommunications and
Internet services industries over one-,
three- and fi ve-year periods)
 One Nokia Leadership Team member’s incentive structure is also tied to
specific sales and gross margin targets in addition to the key financial
targets and strategic objectives.
vices and telecommunications industries and relevant market
indices over one, three and fi ve year periods.
Annual short-term variable incentive goals and underlying
targets require the full Board’s approval for the President and
CEO and the Personnel Committee’s approval for the other
members of the Nokia Group Leadership Team.
The below table outlines the measurement criteria that were
established for the President and CEO and members of the
Nokia Leadership Team for the year . The annual short-
term incentive payout is based on performance relative to
targets set for each measurement criteria listed in the table.
Long-term equity-based incentives
In , long-term equity-based incentives in the form of
performance shares, stock options and restricted shares were
used to align the Nokia Leadership Team members’ interests
with shareholders’ interests, reward for long-term fi nancial
performance and encourage retention, while also considering
evolving regulatory requirements and recommendations and
changing economic conditions. These awards were determined
on the basis of the factors discussed above in “Executive Com-
pensation Philosophy, Programs and Decision-making Process”,
including the comparison of a Nokia Leadership Team mem-
ber’s overall compensation with that of other similarly-situat-
ed executives in the relevant market and the competitiveness
of the executive’s compensation package in that market. In
, performance shares would have settled as Nokia shares if
at least one of the pre-determined threshold performance lev-
els, tied to Nokia’s fi nancial performance, had been achieved
by the end of the performance period. The value the executive
would have received was dependent on Nokia’s share price.
Stock options were granted with the purpose of creating value
for the Nokia Leadership Team member, once vested, only if
the Nokia share price at the time of vesting is higher than the
exercise price of the stock option established at grant. This has
also been intended to focus executives on share price appre-
ciation, thus aligning the interests of the executives with those
 Total Shareholder Return reflects the change in Nokia’s share price during
an established time period, including the amount of dividends paid, di-
vided by Nokia’s share price at the beginning of the period. The calculation
is conducted in the same manner for each company in the peer group.
Only some members of the Nokia Leadership Team are eligible for the
additional Total Shareholder Return element.
Annual short-term variable incentive compensation under
the Nokia short-term cash incentive program is paid once per
year based on pre-determined Nokia performance criteria
assessed as of December . To determine annual short-term
variable incentive pay-out under the Nokia short-term cash
incentive program, the Personnel Committee approved incen-
tive goals are evaluated against pre-defi ned achievement
criteria. The resulting scores are then calculated against each
executives individual incentive target to ascertain an individu-
al pay-out percent. The executive’s annual base salary is then
multiplied by the pay-out percent to determine the pay-out
amount. The achievement scores and individual pay-out per-
cent and amount is presented to the Personnel Committee for
approval. In the event the achievement criteria is not met, the
actual short-term variable incentive awarded to the executive
offi cer can be zero. The maximum payout is only possible with
maximum performance on all measures.
For fi scal year , the annual short term incentive plan
pay-out was in accordance with achievement against the in-
centive criteria. Other short-term variable incentive payments
were made to Nokia Leadership Team members for specifi c
achievements during the year.
For more information on the actual cash compensation paid
in  to our named executive offi cers, please see “Summary
compensation table ”.