Nokia 2015 Annual Report Download - page 91

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Corporate governance
NOKIA IN 2015
Additionally, the Extraordinary General Meeting resolved that the new
members of the Board elected at the meeting will receive the same
annual remuneration as is paid to the members of the Board elected
atthe Annual General Meeting on May 5, 2015, prorated by the new
Board members’ time in service until the closing of the Annual General
Meeting in 2016.
For more details on the composition of the Board, refer to
“CorporateGovernance Statement—Main corporate governance
bodies of Nokia”above. The new members of the Board were not
paidany compensation during the scal year 2015. The following
tableoutlines the total annual compensation paid to the new
members of the Board for their services in 2016, as resolved by
shareholders of Nokia at the Extraordinary General Meeting on
December 2, 2015.
(EUR)(1)
Olivier Piou, Vice Chair as of January 8, 2016(2) 70 082
Louis Hughes, Board member as of January 8, 2016(3) 65 410
Jean Monty, Board member as of January 8, 2016(4) 65 410
(1) The new Board members have received the same annual remuneration as was paid to the
members ofthe Board elected at the Annual General Meeting on May 5, 2015, prorated by the
new Board members’ time in service until the closing of the Annual General Meeting in 2016.
Approximately 40% of each Board member’s annual compensation was paid in Nokia shares
purchased from the market and the remaining approximately 60% in cash.
(2) Represents compensation paid to Olivier Piou, consisting of EUR 70 082 for services as the
ViceChair of the Board.
(3) Represents compensation paid to Louis Hughes, consisting of EUR 60 738 for services as
amember of the Board and EUR 4 672 for services as a member of the Audit Committee.
(4) Represents compensation paid to Jean Monty, consisting of EUR 60 738 for services as
amember of the Board and EUR 4 672 for services as a member of the Audit Committee.
Executive compensation
Introduction
The year 2015 was the rst full year following the Sale of the
D&SBusiness and the integration of the Nokia Networks business.
Witha stable leadership team in place and certain changes in the
compensation structure introduced in 2014, 2015 was about
executing change in the business, preparing for the acquisition
ofAlcatel Lucent and the Sale of the HERE Business.
Our focus for executive compensation is to:
■Attract and retain the right talent;
■Drive performance; and
■Align with shareholder interests.
We have undergone signicant structural changes over the past three
years and continue to do so following our acquisition of Alcatel Lucent.
Additionally, the corporate reporting environment is expected to
evolve further e.g., as a result of the pending shareholder rights
directive in Europe, which would further change disclosure
requirements. To simplify reporting, we have decided to report
information related to executive compensation in accordance
withFinnish regulatory requirements (and in compliance with SEC
requirements) and to provide disclosure of compensation of our
President and CEO and aggregated information for our Group
Leadership Team, as well as to provide a clear explanation of our
policies and practices that relate to the President and CEO and to
ourexecutives and employees more broadly.
Variable compensation plans have paid out in a manner consistent
with the 2015 business results. Short-term incentive plans paid out
above target for 2015 in line with the performance on all three key
metrics we use as a basis for calculating variable compensation—
non-IFRS revenue, non-IFRS operating prot and net cash ow.
Our long-term incentive plan performance condition achievement is
also tied to our business results. In recent years, our performance
shares have not paid out as the required business performance was
not met. It is satisfying to see that the 2013 performance share plan
that vested on January 1, 2016 has delivered value to participants as
they have participated in delivering value to shareholders. The 2013
performance share plan vested at 86.25% of target during which time
we saw an increase in diluted EPS for Continuing operations from
anegative EUR (0.16) for the scal year 2012 to positive EUR 0.67
pershare for the scal year 2014 and the share price increase from
EUR3.49 before the plan was approved to EUR 6.60 atDecember 31,
2015. The 2014 performance share plan will vest onJanuary 1, 2017
and is expected to vest at 125.72% of the targetaward.
Compensation philosophy, design and strategy
Our compensation programs are designed to attract, incentivize and
retain the talent necessary to deliver strong nancial results to the
ultimate benet of our shareholders. Rewards are tied to our strategy
by adopting an appropriate mix of xed and variable compensation to
engage and motivate employees in the performance of the business
and ensure alignment with shareholder interests.
A single compensation framework is used across the Nokia Group
witha varying mix of xed and variable compensation for each level
ofresponsibility. Higher levels of performance-based compensation
andequity compensation are used to reward executives for delivering
long-term sustainable growth and creating value for our shareholders.
We aim to provide a globally competitive compensation oering,
whichis comparable to that of our peer group companies, taking into
account industry, geography, size and complexity. The peer group
isreviewed annually and external advice is sought to conrm
theappropriateness of the peer group and also the quantum and
therelative mix of compensation packages.
In designing our variable compensation programs key consideration
isgiven to:
■incorporating specific performance measures that align directly
withthe execution of our strategy and driving long-term
sustainablesuccess;
■delivering an appropriate amount of performance-related variable
compensation for the achievement of strategic goals and financial
targets in both the short- and long-term;
■appropriately balancing rewards between company and individual
performance; and
■fostering an ownership culture that promotes sustainability and
long-term value creation that aligns the interests of participants
with those of our shareholders.