Nokia 2009 Annual Report Download - page 134

the Restoration and Deferral Plan in excess of IRS deferral limits will be matched 100% up to 8% of
eligible earnings, less contributions made to the 401(k) plan.
OlliPekka Kallasvuo can, as part of his service contract, retire at the age of 60 with full retirement
benefits should he be employed by Nokia at the time. The full retirement benefit is calculated as if
Mr. Kallasvuo had continued his service with Nokia through the retirement age of 65.
Hallstein Moerk, following his arrangement with a previous employer, and continuing in his current
position at Nokia, has a retirement benefit of 65% of his pensionable salary beginning at the age of
62 and early retirement is possible at the age of 55 with reduced benefits. Mr. Moerk will retire at the
end of September 2010 at the age of 57.
Service Contracts
OlliPekka Kallasvuo’s service contract covers his current position as President and CEO and Chairman
of the Group Executive Board. As at December 31, 2009, Mr. Kallasvuo’s annual total gross base salary,
which is subject to an annual review by the Board of Directors and confirmation by the independent
members of the Board, is EUR 1 176 000. His incentive targets under the Nokia shortterm cash
incentive plan are 150% of annual gross base salary. In case of termination by Nokia for reasons
other than cause, including a change of control, Mr. Kallasvuo is entitled to a severance payment of up
to 18 months of compensation (both annual total gross base salary and target incentive). In case of
termination by Mr. Kallasvuo, the notice period is six months and he is entitled to a payment for such
notice period (both annual total gross base salary and target incentive for six months). Mr. Kallasvuo
is subject to a 12month noncompetition obligation after termination of the contract. Unless the
contract is terminated for cause, Mr. Kallasvuo may be entitled to compensation during the non
competition period or a part of it. Such compensation amounts to the annual total gross base salary
and target incentive for the respective period during which no severance payment is paid.
EquityBased Compensation Programs
General
During the year ended December 31, 2009, we sponsored three global stock option plans, five global
performance share plans and four global restricted share plans. Both executives and employees
participate in these plans. Performance shares are the main element of the company’s broadbased
equity compensation program to further emphasize the performance element in employees’ long
term incentives. Our compensation programs promote longterm value sustainability of the company
and ensure that remuneration is based on performance. The rationale for using both performance
shares and stock options for employees in higher job grades is to build an optimal and balanced
combination of longterm equitybased incentives. The equitybased compensation programs intend
to align the potential value received by participants directly with the performance of Nokia. We also
have granted restricted shares to a small selected number of key employees each year.
The equitybased incentive grants are generally conditioned upon continued employment with Nokia,
as well as the fulfillment of performance and other conditions, as determined in the relevant plan
rules.
The broadbased equity compensation program for 2009, which was approved by the Board of
Directors, followed the structure of the program in 2008. The participant group for the 2009 equity
based incentive program continued to be broad, with a wide number of employees in many levels of
the organization eligible to participate. As at December 31, 2009, the aggregate number of
participants in all of our equitybased programs was approximately 13 000 compared with
approximately 18 000 as at December 31, 2008 reflecting changes in our grant guidelines and
reduction in eligible population.
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