Nokia 2015 Annual Report Download - page 98

96 NOKIA IN 2015
Compensation governance practices
The Board of Directors:
■approves and the independent members of the Board confirm the
compensation of the President and CEO upon recommendation
ofthe Personnel Committee;
■approves, upon recommendation from the Personnel Committee,
any long-term incentive compensation, and all equity plans,
programs or similar arrangements of significance that the company
establishes for its employees; and
■decides on the issuance of shares (under authorization from
shareholders) to fulfill the company’s obligations under equity plans
in respect of vested awards to be settled.
The Personnel Committee
As part of its responsibilities the Personnel Committee assists the
Board in discharging its responsibilities relating to all compensation,
including equity compensation, of the Company’s executives and
theterms of employment of the same, making recommendations
totheBoard:
■recommends to the Board the corporate goals and objectives
relevant to the compensation of the President and CEO,
andevaluates the performance of the President and CEO
againstpreviously established goals and objectives as well as
proposes tothe Board the compensation level of the President
andCEO;
■reviews and approves changes to the peer group for assessment
ofthe competitiveness of our compensation from time to time;
■approves and oversees recommendations from the President and
CEO for compensation for other members of the Group Leadership
Team and any other executive-level direct reports to the President
and CEO;
■reviews and approves goals and objectives relevant to the
compensation for other members of the Group Leadership Team
and any other executive-level direct reports to the President and
CEO, and reviews the results of the evaluation of their performance
in relation to the approved goals and objectives;
■reviews and periodically makes recommendations to the Board
regarding the operation and amendment of any long-term incentive
arrangements and all equity plans;
■reviews the content of and ensuring compliance with the share
ownership policy;
■recommends to the board equity grants for the President and
CEO;and
■reviews and approves equity grant nominations to direct reports
ofthe President and CEO.
Independent consultant
The Personnel Committee retains the use of Aon, an independent
external consultant, to assist in the review and determination of
executive compensation. The consultant works directly with the
Personnel Committee and meets at least annually with the committee,
without management present to provide advice on:
■market data and appropriateness of compensation information
compiled by management;
■the appropriateness and competitiveness of our compensation
program relative to market levels and practice; and
■executive compensation trends and developments.
The Committee has reviewed and established that the consultant that
works for the Personnel Committee is independent of Nokia and does
not have any other business relationships with Nokia.
President and CEO
The President and CEO plays an active role in compensation
governance and performance management processes for the Group
Leadership Team and the wider employee population at Nokia.
The President and CEO is not a member of the Personnel Committee
and does not vote at Personnel Committee meetings nor does he
participate in any conversations regarding his own compensation.
Equity compensation
Equity compensation program
A key component of executives’ and senior managers’ compensation
isequity-based long-term incentives with the purpose of aligning the
participants’ interests with those of shareholders. The amount of
equity as a percentage of the compensation package increases with
the seniority of the role. Awards from the annual grant process are
linked to the company’s performance management framework and the
performance of Nokia against our long-term revenue and EPS targets.
Additionally, we have a restricted share plan in place, which is targeted
at retention of key employees and new hires in countries where such
awards are common and where we need to match local market practice
to retain or hire such people.
The active equity plans in 2015 and 2016 are as follows:
Details
Equity plan
Performance shares Restricted shares Employee share purchase plan
Eligible employees Grade based eligibility Grade based eligibility All employees in participating countries
Purpose Annual long-term incentive awards, to
reward for delivery of sustainable
long-term performance, align with the
interests of shareholders and aid
retention of key employees
Exceptional recruitment and
retention
Encourage share ownership within the
Nokia employee population, increasing
engagement and sense of ownership in
the company
Vesting schedule Three year vesting period based on
nancial targets for two years
Vest equally in three tranches on
the 1st, 2nd and 3rd anniversary
ofgrant
Matching shares vest at the end of the
12-month savings period
Compensation continued