Nokia 2015 Annual Report Download - page 93

91
Corporate governance
NOKIA IN 2015
President and Chief Executive Ocer
Overview
The compensation structure for the President and CEO is
determined in line with our philosophy of pay for performance,
suchthat 80% of thetarget compensation is delivered based on
performance. The charts opposite show the potential value of each
element and the overall mix of compensation. Of the variable
compensation, 31.25% comprises short-term incentives, earned
duringthe year for delivery of annual targets and 68.75% is earned
overa three-year period for delivery of sustainable growth in
termsof revenue and EPS, thus ensuring alignment of the interests
of the President and CEO with those of shareholders through
long-term incentives.
The President and CEO is also required to hold a minimum of three
times his base salary in Nokia shares in order to ensure alignment
with shareholders over the long term. He has ve years from his
appointment as the President and CEO to meet this requirement
andMr. Suri isexpected to do so before the fth year through the
vesting of long-term incentive awards. To further ensure alignment
with our pay for performance philosophy in the event that there is
any material restatement of nancial results both short-term and
long-term variable compensation is subject to a clawback policy.
Overall compensation for 2015 was set in relation to the market
asopposite:
For 2016, the Board has approved the increase of Mr. Suri‘s salary
by5%, thus increasing his base salary to EUR 1 050 000 annually
(fromEUR1000 000 in 2015) reecting a combination of Mr. Suri’s
performance and the enlarged role he takes on in 2016 following
theacquisition ofAlcatel Lucent. The on target incentive will remain
at125% of base salary and will increase to EUR 1 312 500 eective
January 8, 2016. Mr.Suri will receive an award of performance shares
in 2016 with a present value of EUR 3 025 000; the ultimate value will
be determined byNokia’s performance against targets and the share
price in the next three years.
Variable pay
The Board believes that the most appropriate metrics for driving
sustainable business performance at Nokia are:
■non-IFRS revenue;
■non-IFRS operating profit; and
■net cash flow.
The variable compensation plans focus on these measures with an
element on a personal strategic objective to support the strategic
development of Nokia, which is not necessarily measurable in nancial
terms in the short term.
A summary of the weighting of incentive based on each
metric is shown opposite:
2015 Pay opportunity
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00
10.00
Min Target Max
Long-term incentive
Short-term incentive
Salary
€m
2015 Pay mix
1 Base salary 20.00%
2 Short-term incentive 25.00%
3 Long-term incentive variable 41.25%
4 Long-term incentive minimum payout 13.75%
1
3
4
2
Incentive opportunity by metric (%)
0
5
10
15
20
25
30
35
40
Long-term incentive
Short-term incentive
% total
variable
pay
Non-IFRS
operating
profit
Non-IFRS
revenue
EPS Net cash
flow
Personal
strategic
objective