Nokia 2013 Annual Report Download - page 127

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COMPENSATION OF THE BOARD OF DIRECTORS AND THE NOKIA GROUP LEADERSHIP TEAM
■ Termination by Mr. Suri for any reason. Mr. Suri may termi-
nate his service contract at any time with six months’ prior
notice. Nokia may choose to pay a lump sum payment in lieu
of his service during the notice period or ask Mr. Suri to con-
tinue his service through all or part of this notice period. In
either event, Mr. Suri is entitled to six months compensation
(including annual base salary, benefi ts, and target incentive),
and his unvested equity awards will be forfeited.
■ Termination by Mr. Suri for Nokia’s material breach of the
service contract. In the event that Mr. Suri terminates his
service contract based on a fi nal arbitration award dem-
onstrating Nokia’s material breach of the service contract,
he is entitled to a severance payment equaling to up to
 months of compensation (including annual base salary,
benefi ts, and target incentive), and all his unvested equity
awards will be forfeited.
■ Termination based on specifi ed events. Mr. Suri’s service
contract includes special severance provisions on a termina-
tion following change of control events. These change of
control provisions are based on a double trigger structure,
which means that both a change of control event and the
termination of the individual’s employment within a defi ned
period of time must take place for any change of control
based severance payment to become due. More specifi -
cally, if a change of control event, as defi ned in the service
contract, has occurred, and Mr. Suri’s service with the com-
pany is terminated either by Nokia or its successor without
cause, or by Mr. Suri for “good reason”, in either case within
 months from such change of control event, Mr.Suri will
be entitled to a severance payment equaling to up to 
months of compensation (including annual base salary,
benefi ts, and target incentive) and cash payment(or pay-
ments) for the pxro-rated value of his outstanding unvested
equity awards, including equity awards under the NSN Equity
Incentive Plan, restricted shares, performance shares and
stock options (if any), payable pursuant to the terms of the
service contract. “Good reasons” referred to above include
amaterial reduction of Mr. Suri’s compensation and a mate-
rial reduction of his duties and responsibilities, as defi nedin
the service contract and as determined by the Board of
Directors.
In addition, the service contract defi nes a specifi c, limited
termination event that applies until June , . Upon this
event, if. Mr. Suri’s service with Nokia is terminated as a result
of the circumstances specifi ed in the service contract, he is
entitled to, in addition to normal severance payment payable
upon his termination by Nokia for reasons other than cause,
to a pro-rated value of unvested equity awards under the NSN
Equity Incentive Plan, provided that the termination of his
service takes place within six months from the defi ned termi-
nation event (and on or before June , ). Subject to this
limited time treatment of unvested equity awards under the
NSN Executive Incentive Plan, all of Mr. Suri’s other unvested
equity will be forfeited.
Subject to his continued employment, Mr. Suri is also
expected to receive payments in the future pursuant to op-
tions granted under the NSN Equity Incentive Plan. This plan
was established in  prior to Nokia’s acquisition of full
ownership of NSN. The plan had two objectives: () increasing
the value of NSN and () creating incentives relating to an exit
option for its parent companies. With the signifi cantly im-
proved performance of NSN, the fi rst objective has been met.
The second objective has not occurred and given the change
in Nokia’s strategy, the likelihood of a sale or IPO has reduced.
Accordingly, the value of the payouts under the NSN Equity
Incentive Plan are expected to be reduced by %.
The actual payments, if any, under the NSN Equity Incentive
Plan will be determined based on the value of the Networks
business and could ultimately decline to zero if the value of
the business falls below a certain level. There is also a cap that
limits the upside for all plan participants, and if an IPO or sale
has not occurred, the maximum total payment to Mr. Suri pur-
suant to the plan would be limited to EUR . million. In the
unlikely event of an IPO or exit event the value of the options
could exceed this maximum.
These equity awards were originally intended to vest upon
the sale or IPO of NSN, or upon the fourth anniversary of
the grant date. Given the change in Nokia’s strategy and the
signifi cant improvement in the performance of NSN, the Nokia
Board of Directors has determined that % of the options
will vest on the third anniversary of grant (June , ) and
% will continue to vest on the fourth anniversary of grant
(June , )
Mr. Suri is subject to a -month non-competition obliga-
tion that applies after the termination of the service contract
or the date when he is released from his obligations and
responsibilities, whichever occurs earlier.
Executive arrangements with the
Leadership Team
Nokia has entered into executive agreements with all members
of the Nokia Leadership Team (valid through April , ) and
the Nokia Group Leadership Team (valid as from May , ).
The below description of employment arrangements refers
to Nokia Group Leadership Team but is valid for both Nokia
Leadership Team and Nokia Group Leadership Team, unless
otherwise specifi cally mentioned. The contracts of Mr. Elop,
Mr.Ihamuotila and Mr. Suri are described above.
Under the terms of their executive agreements with Nokia,
Nokia Group Leadership Team members are entitled to a sev-
erance payment of up to  months of compensation inclusive
of annual base salary, management incentive at target under
the Nokia short-term cash incentive program and benefi ts.
In case of termination by a Nokia Group Leadership Team
member, the notice period is six months and such member is
entitled to a payment for such notice period inclusive of an-
nual base salary, annual management incentive at target and
benefi ts. All equity will be forfeited. In case of termination by
Nokia for cause, Nokia Group Leadership Team member will
not be entitled to any notice period or additional compensa-
tion and all equity will be forfeited. In case of termination by
the Nokia Group Leadership Team member for cause, such
member is entitled to a severance payment equivalent of up
to  months’ compensation inclusive of annual base salary,
annual management incentive at target and benefi ts. Nokia
Group Leadership Team members are subject to a -month
non-competition obligation after termination of the contract.
Unless the contract is terminated by Nokia for cause, the