Nokia 2015 Annual Report Download - page 100

98 NOKIA IN 2015
Performance share plan 2016
In accordance with the previous year’s practice, the primary equity instruments granted to executive employees and employees below the
executive level are performance shares. The number of performance shares to be settled after the restriction period will start at 25% of the
grant amount of 25 500 000 Nokia shares and any pay-out beyond this will be determined with reference to the nancial performance against
the established performance criteria during the two-year performance period. The grant under the performance share plan could result in an
aggregate maximum payout of 51 000 000 Nokia shares, in the event that maximum performance against all the performance criteria is achieved.
The performance share plan 2016 has a three year vesting period and the performance of the plan is based on a two-year performance period
(2016 and 2017). The shares will vest on January 1, 2019. The Board have continued with the practice of the two-year performance period
which gives greater predictability in a fast changing environment and supports greater alignment of underlying achievement with payments.
Targets are set in the context of the Board’s view of the future business plans for Nokia and investor expectations and analyst forecasts and
theBoard will continue to review the suitability of the two-year performance period for future years. The Board is expected to approve the
performance criteria targets of the performance share plan 2016 in conjunction with the publication of its Q1/2016 results announcement.
Theapproval of the targets will be made later this year than in previous years in order to be able to consider all relevant nancial information
available for the new combined Nokia group so that targets are set appropriately.
The remuneration statement required by the Finnish Corporate Governance Code will be updated to include the performance targets once the
targets have been approved.
Performance criterion Weighting Threshold performance(2) Maximum performance(2) Potential range of settlement
Nokia average annual non-IFRS(1) net sales
during January 1, 2016—December 31, 2017 50% * * Threshold number up to maximum level (4 x Threshold number)
Nokia average annual non-IFRS(1) EPS during
January 1, 2016—December 31, 2017 50% * * Threshold number up to maximum level (4 x Threshold number)
(1) Non-IFRS measures exclude all material special items for all periods. In addition, non-IFRS results exclude intangible asset amortization and other purchase price accounting-related items arising from
business acquisitions.
(2) The Board is expected to approve the performance criteria targets of the performance share plan 2016 in conjunction with the publication of its Q1/2016 results announcement.
Achievement of the maximum performance for all criteria would result in the vesting of a maximum of 51 000 000 Nokia shares. Achievements
beyond the maximum performance level will not cause any further shares to vest. Achievement of the threshold performance for all criteria
willresult in the vesting of approximately 12 750 000 shares. Minimum payout under the plan, even if threshold performance is not achieved,
is6 375 000 shares attributable to the 25% minimum payout. Until Nokia shares are delivered, the participants will not have any shareholder
rights, such as voting or dividend rights associated with these performance shares.
Restricted shares
In 2015, restricted shares were used on a selective basis to ensure retention and recruitment of individuals deemed critical to our future
success. The restricted shares vest in three equal tranches on the rst, second and the third anniversary of the award subject to continued
employment with Nokia.
In 2016, restricted shares are granted on a limited basis or exceptional purposes related to retention and recruitment, primarily in the United
States, to ensure we are able to retain and recruit vital talent for the future success of Nokia. Restricted share awards made prior to 2015 vested
in one tranche on the third anniversary of the date of grant. Until the shares are delivered, the participants will not have any shareholder rights,
such as voting or dividend rights, associated with the restricted shares.
Employee share purchase plan
Under our employee share purchase plan, eligible employees can elect to make monthly contributions from their salary to purchase Nokia
shares. The contribution per employee cannot exceed EUR 1 200 per year. The share purchases are made at market value on predetermined
dates on a monthly basis during a 12-month savings period. Nokia will oer one matching share for every two purchased shares the employee
still holds after the last monthly purchase has been made following the end of the 12-month savings period. Participation in the plan is
voluntary to all employees in countries where the plan is oered. In addition, to welcome employees of Alcatel Lucent who have transferred
toNokia as part of the acquisition of Alcatel Lucent and to mark the beginning of the new Nokia Group, Nokia intends to oer 20 free shares
forevery participant making the rst three consecutive share purchases in 2016.
Compensation continued