Nokia 2014 Annual Report Download - page 100

98 NOKIA IN 2014
Service contract of President and CEO Rajeev Suri,
eective as of May 1, 2014
Pursuant to his service contract Mr. Suri’s annual base salary, which
is subject to annual review by the Board and conrmation by the
independent members of the Board, is EUR 1 000 000 and his
incentive target under the Nokia short-term cash incentive plan is
125% of annual base salary. Mr. Suri is entitled to the customary
benets in line with our policies applicable to the senior executives,
however, some of the benets are being provided to him on a tax
assisted basis. Mr. Suri is also eligible to participate in Nokia Group’s
long-term equity based compensation programs in accordance
with Nokia policies and guidelines and as determined by the Board.
Pursuant to his service contract Mr. Suri maintained his participation
in the Nokia Networks Equity Incentive Plan, which is further detailed
in the “—Nokia Networks Equity Incentive Plan” section below.
Mr. Suri’s service contract may be terminated as follows:
■ termination by Nokia for reasons other than cause. In the event
of a termination by Nokia for reasons other than cause, Mr. Suri
is entitled to a severance payment equaling up to 18 months of
compensation (including annual base salary, benefits, and target
incentive), and his unvested equity awards will be forfeited;
■ termination by Nokia for cause. In the event of a termination by
Nokia for cause, Mr. Suri is entitled to no additional compensation
and all his unvested equity awards will be forfeited;
■ termination by Mr. Suri for any reason. Mr. Suri may terminate
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 continue his service
through all or part of this notice period. In either event, Mr. Suri
is entitled to six months of compensation (including annual base
salary, benefits, 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 final arbitration award demonstrating Nokia’s material
breach of the service contract, he is entitled to a severance payment
equaling to up to 18 months of compensation (including annual
base salary, benefits, and target incentive), and all his unvested
equity awards will be forfeited; or
■ termination based on specified events. Mr. Suri’s service contract
includes special severance provisions on a termination following
achange of control event. Such 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 defined period of time must take place in
order for any change of control based severance payment to
become payable. More specifically, if a change of control event has
occurred, as defined in the service contract, and Mr. Suri’s service
with Nokia is terminated either by Nokia or its successor without
cause, or by Mr. Suri for “good reason”, in either case within 18
months from such change of control event, Mr. Suri will be entitled
to a severance payment equaling up to 18 months of compensation
(including annual base salary, benefits, and target incentive)
and cash payment (or payments) for the pro-rated value of his
outstanding unvested equity awards, including equity awards
under the Nokia Networks 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
Compensation continued
above include a material reduction of Mr. Suri’s compensation and
amaterial reduction of his duties and responsibilities, as defined
inthe service contract and as determined by the Board.
In addition, the service contract denes a specic, limited termination
event that applies until June 30, 2016. Upon this event, if Mr. Suri’s
service with Nokia is terminated as a result of the circumstances
speci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 Nokia Networks Equity Incentive Plan, provided that the
termination of his service takes place within six months from the
dened termination event (and at or prior to June 30, 2016). Subject
to this limited time treatment of unvested equity awards under the
Nokia Networks Equity Incentive Plan, all of Mr. Suri’s other unvested
equity will be forfeited.
Mr. Suri is subject to a 12-month non-competition obligation that
appliesafter the termination of the service contract or the date when
he is released from his obligations and responsibilities, whichever
occurs earlier.
Termination provisions for the Nokia Group
Leadership Team members
Maintaining a stable and eective leadership team is considered
essential for protecting and enhancing the best interests of Nokia
andits shareholders. In order to encourage the continued attention,
dedication and continuity of the members of the Nokia Group
Leadership Team to their assigned duties without the distraction
that may arise from the possibility of termination of employment
as a result of a specied change of control event in Nokia, certain
provisions have been made available to them. The provisions for
the President and CEO are described in the “Service contract of
President and CEO Rajeev Suri, eective as of May 1, 2014” section.
In all cases, if an executive is dismissed for cause, then no
compensation will be payable and no outstanding equity will vest.
In the event of termination for any other reason than cause, where the
company pays compensation in lieu of notice period’s salary, benets
and target short-term incentive amounts are taken into account. In
addition, special provisions exist for the treatment of equity awards
granted prior to the Sale of the D&S Business for Mr. Ihamuotila in the
event that Nokia terminates his service contract for reasons other than
cause, death or retirement.
The Nokia Group Leadership Team members have change of control
agreements with Nokia, which serve as an addendum to their service
contracts. These change of control agreements are based on a double
trigger structure, which means that both the change of control event
and the termination of the individual’s employment must take place
for any change of control based severance payment to materialize.
More specically, if a change of control event, as dened in the
agreement, has occurred in the company, and the individual’s
employment with the company is terminated either by Nokia or
its successor without cause, or by the individual for “good reason”
(for example, material reduction of duties and responsibilities), in
either case within 18 months from such change of control event, the
individual will be entitled to his or her notice period compensation
(including base salary, benets, and target incentive) and cash
payment (or payments) for the pro-rated value of the individual’s
outstanding unvested equity, including restricted shares, performance
shares, stock options and equity awards under Nokia Networks Equity
Incentive Plan, payable pursuant to the terms of the agreement.
TheBoard of Directors has the full discretion to terminate or amend
the change of control agreements at any time.