Nokia 2015 Annual Report Download - page 96

94 NOKIA IN 2015
Compensation of the President and Chief Executive Ocer in 2015
and 2014
EUR 2015 2014
Salary 1 000 000 932 666
Short-term variable compensation(1) 1922 125 1 778 105
Stock awards(2) 2 843 711 3 759 936
Payments to dened contribution
retirement plans(3) 491 641 686 206
All other compensation(4) 145 658 168 645
Total(5) 6403 135 7 325 558
(1) Short-term variable compensation payments are part of Nokia’s short-term cash incentive plan.
The amount consists of the annual incentive cash payment and/or other short-term variable
compensation earned and paid or payable by Nokia for the respective scal year.
(2) Amounts shown represent the total grant date fair value of equity grants awarded for the
respective scal year. The fair value of performance shares equals the estimated fair value on
grant date. The estimated fair value is based on the grant date market price of a Nokia share less
the present value of dividends expected to be paid during the vesting period. The value of the
performance shares is presented on the basis of granted number of shares, which is two times
the number of shares at threshold. The value of the 2015 stock awards with performance shares
valued at maximum is (four times the number of shares at threshold) EUR 5 687 422.
(3) Pension arrangements in Finland are characterized as dened contribution pension
arrangements under IAS 19, Employee benets. Mr. Suri is a participant in the Finnish state
mandated TyEL pension arrangements.
(4) All other compensation for Mr. Suri in 2015 includes: housing of EUR 47 950 (2014: EUR 63 708);
EUR 48 510 for travel assistance (2014: EUR 31 576); EUR 0 for tuition of minor children
(2014:EUR 34 055); tax services EUR 17 834 (2014: EUR 17 038) and EUR 31 363 for premiums
paid under supplemental medical and disability insurance and for mobile phone and driver
(2014: EUR22 268).
(5) A signicant portion of equity grants are tied to the performance of the company and aligned
with the value delivered to shareholders. The amounts shown are representative of the value of
the award at grant but are not representative of the amount that will ultimately be received when
the plan vests. The ultimate value of the award will be known when the awards vest.
Equity awards to the President and Chief Executive Ocer, grant
date April 22, 2015:
Performance shares at threshold number 198 500
Performance shares at maximum number 794 000
Grant date fair value EUR(1) 2 843 711
(1) The fair value of performance shares equals the estimated fair value of the grant date. The
estimated value is based on the grant date market price of Nokia shares less the present value of
dividends expected to be paid during the vesting. The value of performance shares is presented
on the basis of a number of shares, which is two times the number at threshold.
The Nokia Group Leadership Team
Remuneration of the Nokia Group Leadership Team members
The remuneration of other members of the Group Leadership Team
consists of base salary, fringe benets, short-term and long-term
incentives. The other members of the Group Leadership Team
participate in the same reward programs, including short-term
incentive and long-term incentive programs and under the same
terms as other eligible employees, although, the quantum and mix of
their compensation varies by role and individual. Short-term incentive
plans are based on rewarding business performance and some or all of
the following metrics are appropriate for their role; non-IFRS revenue,
non-IFRS prot, net cash ow and strategic objectives. Long-term
incentive programs are described under “—Equity Compensation”.
All members of the Group Leadership Team have 20% of their
short-term incentive based on personal strategic objectives, at least
30% of their short-term incentive is based on the Nokia scorecard of
the Nokia Group’s non-IFRS revenue, non-IFRS operating prot and net
cash ow and, depending on their role, they may also have business
unit targets in addition based on a mix of non-IFRS revenue, non-IFRS
operating prot and net cashow.
On average, the members of the Group Leadership Team earned
140% oftheir target incentive amount in 2015.
Compensation continued
Pension arrangements for the Nokia Group Leadership Team
The members of the Group Leadership Team participate in the local
retirement plans applicable to employees in the country of residence.
Executives based in Finland participate in the statutory Finnish
pension system, as regulated by the Finnish TyEL. Refer to “—Pension
arrangements for the President and Chief Executive Ocer” above.
Executives based in the United States participate in our 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. Executives based in Germany participated in the 100%
company funded HERE pension plan. Contributions were based on
pensionable earnings, the pension table and retirement age.
Termination provisions for the Nokia Group Leadership
Teammembers
In all cases, if an executive is dismissed for cause, no compensation
willbe payable and no outstanding equity will vest.
In the event of termination for any other reason than cause, where the
company pays compensation in lieu of notice period’s salary, benets
and target short-term incentive amounts are taken into account.
Additionally, the Board believes that maintaining a stable and eective
leadership team is considered essential for protecting and enhancing
the best interests of Nokia and its shareholders. In order to encourage
the continued focus, dedication and continuity of the members of
theGroup Leadership Team to their assigned duties without the
distraction that may arise from the possibility of termination of
employment as aresult ofa specied change of control event in Nokia,
certain provisions have been made available to them.
As a result some members of the Group Leadership Team have change
of control agreements which serve as an addendum to their executive
agreement and provide for the pro-rata settlement of outstanding
equity awards as follows. The change of control agreements are based
on adouble trigger structure, which means that both the change of
control event and the termination of the individual’s employment
must take place for any change of control based severance payment
tomaterialize. More specically, if a change of control event, as
dened in the agreement, has occurred in the company, and the
individual’s employment with the company is terminated either by
Nokia or its successor without cause, or by the individual for “good
reason” (for example, material reduction of duties and responsibilities),
in either case within 18months from such change of control event,
theindividual will be entitled to his or her notice period compensation
(including base salary, benets and target incentive) and cash payment
(or payments) for the pro-rated value of the individual’s outstanding
unvested equity, includingrestricted shares, performance shares,
stock options and equity awards under Nokia Networks EIP, payable
pursuant to the terms ofthe agreement. The Board has full discretion
to terminate or amend the change of control agreements at any time.
Under inherited change ofcontrol agreements for former Alcatel
Lucent executives, compensation of 18 months’ salary plus target
incentive is payable in the event ofan involuntary termination or
“goodreason” event should either occur within 12 months of
Nokiagaining control of Alcatel Lucent. Additionally, anyremaining
Alcatel Lucent equity awards not already accelerated as part of the
transaction would also be settled.