Nokia 2014 Annual Report Download - page 99

97
Corporate governance
NOKIA IN 2014
Long-term incentives
Our long-term incentives are designed to ensure alignment with
the interests of shareholders and the delivery of sustainable success
at a corporate level. Long-term incentive awards were predominantly
made in performance shares, the details of which are discussed in
more detail in the “—Equity compensation” section below. In addition
to the target level of long-term incentive awards, additional one-time
performance share awards were made to Mr. Suri and Mr. Elhage.
Pension arrangements for the members of the Nokia Group
Leadership Team
The President and CEO and other members of the Nokia Group
Leadership Team participate in the local retirement plans applicable
toemployees in the country of residence. Executives based in Finland,
Mr. Suri, Mr. Ihamuotila and Mr. Elhage, participate in the statutory
Finnish pension system, as regulated by the Finnish Employees’
Pension Act (395/2006, as amended) (the “Finnish TyEL”), which
provides for a retirement benet based on years of service and
earnings according to prescribed rules. No supplemental pension
arrangements are provided. Under the Finnish TyEL pension system,
base pay, incentives and other taxable fringe benets are included
inthe denition of earnings, while gains realized from equity are not.
Retirement benets are available from age 63 to 68, according to an
increasing scale. Mr. Haidamus participates in Nokia’s US Retirement
Savings and Investment Plan. Under this 401(k) plan, participants elect
to make voluntary pre-tax contributions that are 100% matched by
Nokia up to 8% of eligible earnings. 25% of the employer’s match
vests for the participants annually during the rst four years of their
employment. Mr. Fernback participates in the HERE Pension Plan that
is100% company funded. Contributions are based on pensionable
earnings, the pension table and retirement age.
Other arrangements
In line with Nokia’s high ethical standards, Nokia has adopted a new
more stringent clawback policy. According to this policy, variable pay
can be clawed back from executives, to whom the policy applies, in the
event of a specied misconduct or a materially adverse misstatement.
Compensation governance practices
The Board of Directors
■Approves and the independent members of the Board confirm the
compensation of the President and CEO upon recommendation of
the Personnel Committee;
■approves upon recommendation from the Personnel Committee
any long-term incentive compensation, and all equity plans,
programs or similar arrangements of significance that the company
establishes for its employees; and
■ decides on the issuance of shares to fulfill the company’s obligations
under equity plans in respect of vested awards to be settled.
The Personnel Committee
As part of its responsibilities the Personnel Committee assists the
Board in discharging its responsibilities relating to all compensation,
including equity compensation, of the Company’s executives and
theterms of employment of the same, making recommendations
tothe Board:
■ recommends to the Board the corporate goals and objectives
relevant to the compensation of the President and CEO, and
evaluates the performance of the President and CEO against
previously established goals and objectives as well as proposes
to the Board the compensation level of the President and CEO;
■ reviews and approves changes to the peer group for assessment
of the competitiveness of our compensation from time to time;
■ approves and oversees recommendations from the President and
CEO for compensation for other members of the Nokia Group
Leadership Team and any other executive-level direct reports to
the CEO;
■reviews and approves goals and objectives relevant to the
compensation for other members of the Nokia Group Leadership
Team and any other executive-level direct reports to the CEO, and
reviews the results of the evaluation of their performance in relation
to the approved goals and objectives;
■ reviews and periodically makes recommendations to the Board
regarding the operation and amendment of any long-term incentive
arrangements and all equity plans; and
■ reviews the content of and ensuring compliance with the share
ownership policy.
Independent consultant
The Personnel Committee retains the use of an independent external
consultant to assist in the review and determination of executive
compensation. The consultant works directly with the Personnel
Committee and meets annually with the Committee, without
management present to provide advice on:
■market data and appropriateness of compensation information
compiled by management;
■the appropriateness and competitiveness of our compensation
program relative to market levels and practice; and
■ executive compensation trends and developments.
The Committee has reviewed and established that the consultant that
works for the Personnel Committee is independent of Nokia and does
not have any other business relationships with Nokia.
President and CEO
The President and CEO plays an active role in compensation
governance and performance management processes for his direct
reports and the wider employee population in Nokia.
The President and CEO is not a member of the Personnel Committee
and does not vote at Personnel Committee meetings nor does he
participate in any conversations regarding his own compensation.