Nokia 2014 Annual Report Download - page 95

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Corporate governance
NOKIA IN 2014
Proposal by the Corporate Governance and Nomination Committee
for compensation to the Board of Directors in 2015
On January 29, 2015, the Corporate Governance and Nomination
Committee of the Board announced its proposal to the Annual General
Meeting convening on May 5, 2015 regarding the remuneration to
the Board in 2015. The Committee will propose that the annual fee
payable to the Board members elected at the same meeting for a term
until the close of the Annual General Meeting in 2016 remains at the
same level as it has been for the past seven years and be as follows:
EUR 440 000 for the Chairman, EUR 150 000 for the Vice Chairman
and EUR 130 000 for each member; for the Chairman of the Audit
Committee and the Chairman of the Personnel Committee an
additional annual fee of EUR 25 000, and for each member of the
Audit Committee an additional annual fee of EUR 10 000.
The guiding principle of the Corporate Governance and Nomination
Committee’s remuneration proposal is to align the interests of the
directors with those of the shareholders by remunerating directors
primarily with Nokia shares that according to the current policy shall
be retained for the duration of the Board membership. Therefore,
the Committee will propose that, as in the past, approximately 40% of
the Board remuneration be paid in Nokia shares purchased from the
market or alternatively by using treasury shares held by the company.
The shares shall be retained until the end of a director’s Board
membership in line with the current Nokia policy (except for those
shares needed to oset any costs relating to the acquisition of the
shares, including taxes). The rest of the remuneration would be
payable in cash, most of which is typically used to cover taxes arising
from the remuneration.
The Committee’s aim is to ensure that Nokia has an ecient Board
of international professionals representing a diverse mix of skills and
experience. A competitive Board remuneration contributes to the
achievement of this target.
In determining the proposed remuneration, it is the Committee’s
policy to review and compare the total remuneration levels and their
criteria paid in other global companies with net sales and complexity
ofbusiness comparable to that of Nokia’s. It is the company’s policy
that the remuneration consists of an annual fee only, and that no fees
for meeting attendance are paid. It is also the company’s policy that a
signicant portion of director compensation will be paid in the form of
company shares purchased from the market or by using shares held by
the company and that each Board member shall retain, in accordance
with the current policy, all Nokia shares received as director
compensation until the end of his or her Board membership (except
for those shares needed to oset any costs relating to the acquisition
of the shares, including taxes). In addition, it is Nokia’s policy that
non-executive members of the Board do not participate in any of
its equity programs and do not receive stock options, performance
shares, restricted shares or any other equity-based or otherwise
variable compensation for their duties as Board members.
Executive compensation
Introduction
The year 2014 was one of fundamental change for Nokia.
Following the Sale of the D&S Business, Nokia emerged with three
businesses—Nokia Networks, HERE and Nokia Technologies.
As a result of these changes and the new Nokia strategy we have
introduced new corporate values and reviewed and refreshed
our executive pay practices and policies for the Nokia Group
Leadership Team.
Key updates made to our executive compensation practices are
as follows:
Drive performance
■ We have updated the mix of various compensation elements to
reflect market practice for companies of similar size and complexity.
■Performance shares are now used as the primary vehicle for
long-term incentives.
Attract and retain the right talent
■ We have updated our peer group for assessment of the
competitiveness of our compensation packages and structure given
our renewed business and strategy.
Align with shareholder interests
■ Our share ownership and clawback policies have been strengthened
as part of the review of our compensation approach in order to
ensure appropriate alignment with shareholders and accountability
for sustainable long-term company success.