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About Nokia - Corporate governance
- Compensation
- Board of Directors
- Group Executive Board
- Service contracts
- Share ownership
- Management stock option ownership
- Performance shares and restricted shares
- Nokia's equity based compensation programs
- Stock ownership guidelines for executive management
- Insiders' trading in securities
Board of Directors
For the year ended December 31, 2006, the aggregate remuneration of the non-executive members of the Board of Directors was EUR 1 472 500. This amount includes the full annual remuneration of Jorma Ollila, Chairman (Chairman and CEO until June 1, 2006) for his services as Chairman of the Board of Directors, only. Non-executive members of the Board of Directors do not receive stock options, performance shares, restricted shares or other variable compensation. The remuneration for members of the Board of Directors is resolved annually by our Annual General Meeting, upon proposal by the Corporate Governance and Nomination Committee of the Board. The remuneration is resolved for the period from the respective Annual General Meeting until the next Annual General Meeting.
The following table sets forth the total annual remuneration paid to the members of the Board of Directors, as resolved by the shareholders at the Annual General Meetings in respective years.
| 2006 | 2005 | 2004 | |||||||
| Board of Directors | Gross annual fee EUR1 | Shares received | Gross annual fee EUR1 | Shares received | Gross annual fee EUR1 | Shares received | |||
| Jorma Ollila 2 Chairman | 375 000 | 8 035 | 165 000 | 5 011 | 150 000 | 4 834 | |||
| Paul J. Collins 3 Vice Chairman | 162 500 | 3 481 | 162 500 | 4 935 | 150 000 | 4 834 | |||
| Georg Ehrnrooth 4 | 120 000 | 2 570 | 120 000 | 3 644 | 100 000 | 3 223 | |||
| Daniel R. Hesse 5 | 110 000 | 2 356 | 110 000 | 3 340 | - | - | |||
| Dr. Bengt Holmström 6 | 110 000 | 2 356 | 110 000 | 3 340 | 100 000 | 3 223 | |||
| Per Karlsson 7 | 135 000 | 2 892 | 135 000 | 4 100 | 125 000 | 4 029 | |||
| Dame Marjorie Scardino 8 | 110 000 | 2 356 | 110 000 | 3 340 | 100 000 | 3 223 | |||
| Keijo Suila 9 | 120 000 | 2 570 | - | - | - | - | |||
| Vesa Vainio 10 | 120 000 | 2 570 | 120 000 | 3 644 | 100 000 | 3 223 | |||
| 11 | |||||||||
| 12 | |||||||||
1Approximately 60% of the gross annual fee is paid in cash. Approximately 40% is paid in Nokia shares acquired from the market included in the table under “Shares received”.
2 This table includes fees paid for Mr. Ollila, Chairman, for his services as Chairman of the Board, only.
3 The 2006 and 2005 fees of Mr. Collins amounted to a total of EUR 162 500, consisting of a fee of EUR 137 500 for services as Vice Chairman of the Board and EUR 25 000 for services as Chairman of the Personnel Committee. The 2004 fee of Mr. Collins amounted to a total of EUR 150 000, consisting of a fee of EUR 125 000 for services as Vice Chairman of the Board and EUR 25 000 for services as Chairman of the Personnel Committee.
4 The 2006 and 2005 fees of Mr. Ehrnrooth amounted to a total of EUR 120 000, consisting of a fee of EUR 110 000 for services as a member of the Board and EUR 10 000 for services as a member of the Audit Committee. The 2004 fee of Mr. Ehrnrooth amounted to EUR 100 000 for services as a member of the Board.
5 The 2006 and 2005 fees of Mr. Hesse amounted to EUR 110 000 for services as a member of the Board.
6 The 2006 and 2005 fees of Mr. Holmström amounted to EUR 110 000 for services as a member of the Board. The 2004 fee of Mr. Holmström amounted to EUR 100 000 for services as a member of the Board.
7 The 2006 and 2005 fees of Mr. Karlsson amounted to a total of EUR 135 000, consisting of a fee of EUR 110 000 for services as a member of the Board and EUR 25 000 for services as Chairman of the Audit Committee. The 2004 fee of Mr. Karlsson amounted to a total of EUR 125 000, consisting of a fee of EUR 100 000 for services as member of the Board and EUR 25 000 for services as Chairman of the Audit Committee.
8 The 2006 and 2005 fees of Ms. Scardino amounted to EUR 110 000 for services as a member of the Board. The 2004 fee of Ms. Scardino amounted to EUR 100 000 for services as a member of the Board.
9 The 2006 fee of Mr. Suila amounted to a total of EUR 120 000, consisting of a fee of EUR 110 000 for services as a member of the Board and EUR 10 000 for services as a member of the Audit Committee. Mr. Suila is a Nokia Board member since 2006.
10 The 2006 and 2005 fees of Mr. Vainio amounted to a total of EUR 120 000, consisting of a fee of EUR 110 000 for services as a member of the Board and EUR 10 000 for services as a member of the Audit Committee. The 2004 fee of Mr. Vainio amounted to EUR 100 000 for services as a member of the Board.
11 Edouard Michelin was paid the gross annual fee of EUR 110 000 for services as a member of the Board prior to his accidental death in May 2006. This amount included 2 356 shares. The 2005 fee of Mr. Michelin amounted to EUR 110 000 for services as a member of the Board, which amount included 3 340 shares.
12 Arne Wessberg served as a member of the Board until March 30, 2006. The 2005 fee of Mr. Wessberg amounted to a total of EUR 120 000, consisting of a fee of EUR 110 000 for services as a member of the Board and EUR 10 000 for services as a member of the Audit Committee. The total amount included 3 644 shares. The 2004 fee of Mr. Wessberg amounted to EUR 100 000 for services as a member of the Board, which amount included 3 223 shares.
Remuneration of the Board of Directors in 2007
The Annual General Meeting held on May 3, 2007 resolved that the annual remuneration payable to the Board members for the term until the close of the Annual General Meeting in 2008 is as follows: EUR 375 000 for the Chairman, EUR 150 000 for the Vice Chairman and EUR 130 000 for each member. In addition, the Annual General Meeting resolved that the Audit Committee and the Chairman of the Personnel Committee will each be paid an additional annual fee of EUR 25 000 and members of the Audit Committee an additional annual fee of EUR 10 000 each. The Annual General Meeting also resolved, in line with the past practice, that approximately 40% of the remuneration will be paid in Nokia shares purchased from the market.
Group Executive Board
At December 31, 2006, Nokia had a Group Executive Board consisting of 11 members. The changes in the membership of our Group Executive Board during 2006 were as follows: Jorma Ollila resigned from his position as CEO and Chairman of the Group Executive Board effective
The following tables summarize the aggregate cash compensation paid and the long-term equity-based incentives granted to the members of the Group Executive Board under our equity plans in 2006.
| Aggregate cash compensation to the Group Executive Board for 2006 | ||||
| Number of members, December 31, 2006 | Base salaries 3 EUR | Cash incentive payments 1 2 EUR | ||
| 11 | 5 273 684 | 3 300 759 | ||
1 Includes payments pursuant to cash incentive arrangements for the 2006 calendar year. The cash incentives are paid as a percentage of annual base salary based on Nokia’s short-term cash incentives.
2 Excluding any gains realized upon exercise of stock options.
3 Includes base pay and bonuses to Pertti Korhonen for the period until March 31, 2006, to Jorma Ollila until May 31, 2006 (including his compensation as CEO only) and to Niklas Savander as from April 1, 2006.
| Long-term equity-based incentives granted in 20061 | ||||||
| Group Executive Board | All employees, total | Total number of participants | ||||
| Performance shares at threshold 2 | 380 000 | 5 140 736 | 13 500 | |||
| Stock options | 1 520 000 | 11 421 939 | 5 200 | |||
| Restricted shares | 405 000 | 1 669 050 | 250 | |||
1 The equity-based incentive grants are generally forfeited if the employment relationship terminates with Nokia. The settlement is conditional upon performance and service conditions, as determined in the relevant plan rules.
2 At maximum performance, the settlement amounts to four times the number of performance shares originally granted at threshold.
3 Including Pertti Korhonen until March 31, 2006, Jorma Ollila until May 31, 2006 and Niklas Savander from April 1, 2006.
| Summary Compensation Table 2006 | |||||||||
| Name and principal position | Year ** | Salary EUR | Bonus 1 EUR | Stock awards 2 EUR | Option awards EUR 2 | Non-equity deferred incentive plan compen-sation EUR | Change in pension value and non-qualified compen-sation earnings EUR | All other compen-sation EUR | Total EUR |
| Jorma Ollila Chairman of the Board and former CEO (CEO until June 1) | 2006 | 609 524 | 643 942 | 5 105 118 | 1 220 610 | * | 3 | 662 764 5 | 8 241 955 |
| 2005 | 1 500 000 | 3 212 037 | 4 | ||||||
| 2004 | 1 475 238 | 1 936 221 | |||||||
| Olli-Pekka Kallasvuo President and CEO (President and COO until June 1) | 2006 | 898 413 | 664 227 | 1 529 732 | 578 465 | * | 1 496 883 3 6 | 38 960 7 | 5 206 680 |
| 2005 | 623 524 | 947 742 | |||||||
| 2004 | 584 000 | 454 150 | |||||||
| Richard Simonson EVP and Chief Financial Officer | 2006 8 | 460 070 | 292 673 | 958 993 | 194 119 | * | 84 652 9 | 1 990 507 | |
| 2005 | 461 526 | 634 516 | |||||||
| Anssi Vanjoki EVP and General Manager, Multimedia | 2006 | 505 949 | 353 674 | 938 582 | 222 213 | * | 215 143 3 | 29 394 10 | 2 264 349 |
| 2005 | 476 000 | 718 896 | |||||||
| Mary McDowell EVP and General Manager, Enterprise Solutions | 2006 8 | 466 676 | 249 625 | 786 783 | 213 412 | * | 45 806 11 | 1 762 302 | |
| Hallstein Moerk EVP and Head of Human Resources | 2006 8 | 390 854 | 205 516 | 652 530 | 123 802 | * | 12 | 269 902 13 | 1 642 603 |
1 Bonus payments are part of Nokia’s short-term cash incentives. The amount consists of the bonus awarded and paid or payable by Nokia for the respective fiscal year.
2 Amounts shown represent share based compensation expense recognized in 2006 for all outstanding equity grants in accordance IFRS 2, Share-based payment.
3 The change in pension value represents the proportionate change in the company’s liability related to the individual executive. These executives participate in the Finnish TEL pension system that provides for a retirement benefit based on years of service and earnings according to the prescribed statutory system. The TEL system is a partly funded and a partly pooled “pay as you go” system. The figures shown represent only the change in liability for the funded portion. The method used to derive the actuarial IFRS valuation is based upon salary information at December 31, 2005. Actuarial assumptions including salary increases and inflation have been determined to arrive at the valuation at the year end 2006.
4 Nokia’s liability of EUR 676 117 for Mr. Ollila’s disability benefit under the Finnish TEL pension (see footnote 3 above) was cancelled upon end of his employment effective on June 1, 2006. Furthermore, Nokia’s liability of EUR 4 787 000 for Mr. Ollila’s early retirement benefit at the age of 60 provided under his service agreement was also cancelled as of June 1, 2006. These resulted in a decrease of Nokia’s total liability of EUR 5 463 117.
5 All other compensation for Mr. Ollila includes: EUR 375 000 for his services as Chairman of the Board or Directors; a payout of EUR 166 666 for unused vacation days upon end of employment; service awards in the amount of EUR 119 048 and EUR 2 050 for driver and mobile phone.
6 The change in pension value for Mr. Kallasvuo includes EUR 194 883 for the proportionate change in the company’s liability related to the individual under the funded part of the Finnish TEL pension (see footnote 3 above). In addition, it includes EUR 1 302 000 for the change in liability in the early retirement benefit at the age of 60 provided under his service contract.
7 All other compensation for Mr. Kallasvuo includes: EUR 21 240 for car allowance, EUR 10 000 for financial counseling, EUR 4 680 for driver and EUR 3 040 for mobile phone and club membership.
8Salaries, benefits and perquisites of Mr. Simonson, Mr. Moerk and Ms. McDowell are paid and denominated in USD. Amounts were converted to EUR using year-end 2006 USD/EUR exchange rate of 1.31.
9 All other compensation for Mr. Simonson includes: EUR 13 282 company contributions to the 401(k) plan, EUR 23 419 company contributions to the Restoration and Deferral Plan, EUR 21 519 provided as benefit under Nokia’s relocation policy, EUR 12 977 for car allowance and EUR 13 454 for financial counseling
.10 All other compensation for Mr. Vanjoki includes: EUR 19 154 for car allowance; EUR 10 000 for financial counseling and the remainder for mobile phone
11 All other compensation for Ms. McDowell includes: EUR 13 282 company contributions to the 401(k) plan, EUR 13 105 company contributions to the Restoration and Deferral Plan, EUR 2 688 provided as benefit under Nokia’s relocation policy, EUR 12 977 for car allowance and EUR 3 753 for financial counseling
.12 The change in pension value for Mr. Moerk was reduced by EUR 80 000. This represents the change in Nokia’s liability in the retirement benefit at age of 62 provided under his service contract
.13 All other compensation for Mr. Moerk includes: EUR 245 434 provided as a benefit under Nokia’s expatriate policy and EUR 24 468 for car allowance, financial counseling and Employee Stock Purchase Plan benefit
.* None of the named executive officers participated in a formulated, non-discretionary, incentive plan. Annual incentive payments are included under the “Bonus” column.
** History has been provided for those data elements previously disclosed.
| Equity grants in 2006 1 | |||||||||
| Option awards | Stock awards | ||||||||
| Name and principal position | Grant date | Number of shares underlying options | Grant price (EUR) | Grant date fair value 2 (EUR) | Performance shares at threshold (number) | Performance shares at maximum (number) | Restricted shares (number) | Grant date fair value 3 (EUR) | |
| Jorma Ollila Chairman of the Board and former CEO (CEO until June 1) | May 5 | 400 000 | 18.02 | 1 349 229 | 100 000 | 400 000 | 100 000 | 4 666 937 | |
| Olli-Pekka Kallasvuo President and CEO (President and COO until June 1) | May 5 | 300 000 | 18.02 | 1 011 922 | 75 000 | 300 000 | 100 000 | 3 668 604 | |
| Richard Simonson EVP and Chief Financial Officer | May 5 | 100 000 | 18.02 | 337 307 | 25 000 | 100 000 | 25 000 | 1 102 125 | |
| Anssi Vanjoki EVP and General Manager, Multimedia | May 5 | 100 000 | 18.02 | 337 307 | 25 000 | 100 000 | 25 000 | 1 102 125 | |
| Mary McDowell EVP and General Manager, Enterprise Solutions | May 5 | 100 000 | 18.02 | 337 307 | 25 000 | 100 000 | 25 000 | 1 102 125 | |
| Hallstein Moerk EVP and Head of Human Resources | May 5 | 60 000 | 18.02 | 202 384 | 15 000 | 60 000 | 15 000 | 661 275 | |
1 Including all grants made during 2006. Stock option grants were made under the Nokia Stock Option Plan 2005, performance share grants under the Nokia Performance Share Plan 2006 and restricted share grants under the Nokia Restricted Share Plan 2006.
2 The fair values of stock options equal the estimated fair value on the grant date, calculated using the Black-Scholes model. The stock option exercise price is EUR 18.02. The Helsinki Stock Exchange closing market price at grant date was EUR 17.97.
3 The fair value of performance shares and restricted shares equals the estimated fair value on grant date. The estimated fair value is based on the grant date market price of the Nokia share less the present value of dividends expected to be paid during the vesting period. The value of performance shares is presented on the basis of a number of shares which is two times the number at threshold.
Pension arrangements for the members of the Group Executive Board
The members of the Group Executive Board in 2006 participate in the local retirement programs applicable to employees in the country where they reside. Executives in Finland participate in the Finnish TEL pension system, which provides for a retirement benefit based on years of service and earnings according to a prescribed statutory system. Under the Finnish TEL pension system, base pay, incentives and other taxable fringe benefits are included in the definition of earnings, although gains realized from equity are not. The Finnish TEL pension scheme provides for early retirement benefits at age 62 with a reduction in the amount of retirement benefits. Standard retirement benefits are available from age 63 to 68, according to an increasing scale.
Executives in the United States participate in Nokia’s Retirement Savings and Investment Plan. Effective July 1, 2006, 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. Prior to July 1, 2006 participants could elect to make voluntary pre-tax contributions that were 100% matched by Nokia up to 6% of eligible earnings with an additional annual discretionary contribution of up to 2% of eligible earnings made by Nokia. For participants earning in excess of the eligible earning limit, Nokia offers an additional Restoration and Deferral Plan. This plan allows employees to defer up to 50% of their salary and 100% of their bonus into a non-qualified plan. Prior to July 1, 2006, Nokia also made annual discretionary contributions to this non-qualified plan of up to 2% of the earnings above 401(k) eligibility limits. Effective July 1, 2006, these 2% discretionary contributions were eliminated. The last contributions were made in 2006 based on 2005 earnings.
Olli-Pekka Kallasvuo can, as part of his service contract, retire at the age of 60 with full retirement benefit should he be employed by Nokia at the time. The full retirement benefit is calculated as if Mr. Kallasvuo had continued his service with Nokia through the statutory retirement age of 65.
Jorma Ollila’s service contract ended as of June 1, 2006, after which he is not eligible to receive any additional retirement benefits from Nokia.
Simon Beresford-Wylie participates in the Nokia International Employee Benefit Plan (NIEBP). The NIEBP is a defined contribution retirement arrangement provided to some Nokia employees on international assignments. The contributions to NIEBP are funded two-thirds by Nokia and one-third by the employee. Because Mr. Beresford-Wylie also participates in the Finnish TEL system, the company contribution to NIEBP is 1.3% of annual earnings.
Hallstein Moerk, following his arrangement with a previous employer, has also in his current position at Nokia a retirement benefit of 65% of his pensionable salary beginning at the age of 62. Early retirement is possible at the age of 55 with reduced benefits.
Service contracts
Jorma Ollila’s service contract, which covered his position as CEO, ended as of June 1, 2006 without any severance or other payments from Nokia. Following the termination of his service contract, he is no longer eligible for incentives, bonuses, stock options or other equity grants or additional retirement benefits from Nokia. Mr. Ollila was entitled to retain all vested and unvested stock options and other equity compensation granted to him prior to June 1, 2006.
Olli-Pekka Kallasvuo’s service contract covers his current position as President and CEO and Chairman of the Group Executive Board. The contract also covered his prior position as President and COO. Mr. Kallasvuo’s annual total gross base salary, which is subject to an annual review by the Board of Directors, was EUR 750 000 from January 1, 2006 until May 31, 2006, and is EUR 1 000 000 from June 1, 2006. His incentive targets under the Nokia short-term incentive plan were 125% of annual gross base salary, starting from January 1, 2006 and are 150% of annual gross base salary, starting June 1, 2006. In case of termination by Nokia for reasons other than cause, including a change of control, Mr. Kallasvuo is entitled to a severance payment of up to 18 months of compensation (both annual total gross base salary and target incentive). In case of termination by Mr. Kallasvuo, the notice period is 6 months and he is entitled to a payment for such notice period (both annual total gross base salary and target incentive for 6 months). Mr. Kallasvuo is subject to a 12-month non-competition obligation after termination of the contract. Unless the contract is terminated for cause, Mr. Kallasvuo may be entitled to compensation during the non-competition period or a part of it. Such compensation amounts to the annual total gross base salary and target incentive for the respective period during which no severance payment is paid.
Share ownership
The following section describes the ownership or potential ownership interest in the company of the members of our Board of Directors and the Group Executive Board, either through share ownership or through holding of equity-based incentives, which may lead to share ownership in the future. Since 1999, approximately 40% of the remuneration paid to the Board of Directors has been paid in Nokia shares purchased from the market. Non-executive members of the Board of Directors do not receive stock options, performance shares, restricted shares or other variable pay compensation.
Board of Directors
On December 31, 2006, the members of our Board of Directors held the aggregate of 810 302 shares and ADSs in Nokia, which represented 0.02% of our outstanding share capital and total voting rights excluding shares held by the Group as of that date.
The following table sets forth the number of shares and ADSs beneficially held by members of the Board of Directors as of December 31, 2006.
| Shares1 | ADSs | |
| Jorma Ollila 2 | 0 | |
| Paul J. Collins | 0 | |
| Georg Ehrnrooth 3 | 0 | |
| Daniel R. Hesse | 0 | |
| Bengt Holmström | 0 | |
| Per Karlsson 3 | 0 | |
| Marjorie Scardino | 0 | |
| Keijo Suila | 2 570 | 0 |
| Vesa Vainio | 0 | |
| Total |
1 The number of shares includes not only shares acquired as compensation for services rendered as a member of the Board of Directors, but also shares acquired by any other means.
2 For Mr. Ollila, this table includes his share ownership only. Mr. Ollila was the company’s CEO until June 1, 2006 and received stock options, performance shares and restricted shares in that capacity until the said date.
3 Mr. Ehrnrooth’s and Mr. Karlsson’s holdings include both shares held personally and shares held through a company.
Group Executive Board
The following table sets forth the share ownership, as well as potential ownership interest through holding of equity-based incentives, of the members of the Group Executive Board as of December 31, 2006.
| Shares | Shares receivable through stock options | Shares receivable through performance shares at | Shares receivable through restricted shares | |
| Number of equity instruments held by Group Executive Board | 519 716 | 2 755 806 | 477 360 | 884 500 |
| % of the share capital 1 | 0.013 | 0.069 | 0.012 | 0.022 |
| % of the total outstanding equity incentives (per instrument) 2 | - | 3.007 | 3.784 | 14.584 |
1 The percentage is calculated in relation to the outstanding share capital and total voting rights of the company, excluding shares held by the Group.
2 The percentage is calculated in relation to the total outstanding equity incentives per instrument, i.e. stock options, performance shares and restricted shares, as applicable.
3 Performance shares at threshold represent the original grant. At maximum performance, the settlement amounts to four times the number of performance shares originally granted (at threshold). Due to the interim payout in 2006, the maximum number of Nokia shares deliverable under the performance share plan 2004 equals three times the number of performance shares originally granted (at threshold).
The following table sets forth the number of shares and ADSs beneficially held by members of the Group Executive Board as of December 31, 2006
| Shares | ADSs | |
| Olli-Pekka Kallasvuo | 130 000 | 0 |
| Rober Andersson | 16 260 | 0 |
| Simon Beresford-Wylie | 17 924 | 0 |
| Mary McDowell | 7 935 | 5 000 |
| Hallstein Moerk | 36 074 | 0 |
| Tero Ojanperä | 1 174 | 0 |
| Niklas Savander | 11 868 | 0 |
| Richard Simonson | 26 621 | 20 000 |
| Veli Sundbäck | 128 524 | 0 |
| Anssi Vanjoki | 113 050 | 0 |
| Kai Öistämö | 5 286 | 0 |
| Total | 25 000 |
Mr. Korhonen resigned as member of the Group Executive Board effective April 1, 2006, and ceased employment with us on May 31, 2006. He held 15 300 shares as of March 31, 2006.
Stock option ownership of the Group Executive Board
The following table provides certain information relating to stock options held by members of the Group Executive Board as of December 31, 2006. These stock options were issued pursuant to Nokia Stock Option Plans 2001, 2003 and 2005.
| Number of stock options 2 | Total intrinsic value of stock options, December 31, 2006 | |||||||
| Stock option category 1 | Expiration date | Exercise price per share EUR | Exercisable | Unexercisable | Exercisable 4 | Unexercisable | ||
| Olli Pekka Kallasvuo | 2001 A/B | December 31, 2006 | 36.75 | 100 000 | 0 | 0 | 0 | |
| December 31, 2006 | 26.67 | 50 000 | 0 | 0 | 0 | |||
| 2002 A/B | December 31, 2007 | 17.89 | 175 000 | 0 | 0 | 0 | ||
| 2003 2Q | December 31, 2008 | 14.95 | 97 500 | 22 500 | 51 675 | 11 925 | ||
| 2004 2Q | December 31, 2009 | 11.79 | 33 750 | 26 250 | 124 538 | 96 863 | ||
| 2005 2Q | December 31, 2010 | 12.79 | 18 750 | 41 250 | 50 438 | 110 963 | ||
| 2005 4Q | December 31, 2010 | 14.48 | 0 | 100 000 | 0 | 100 000 | ||
| 2006 2Q | December 31, 2011 | 18.02 | 0 | 300 000 | 0 | 0 | ||
| Robert Andersson | 2001 A/B | December 31, 2006 | 36.75 | 21 500 | 0 | 0 | 0 | |
| December 31, 2006 | 26.67 | 10 750 | 0 | 0 | 0 | |||
| 2002 A/B | December 31, 2007 | 17.89 | 30 000 | 0 | 0 | 0 | ||
| 2003 2Q | December 31, 2008 | 14.95 | 14 625 | 3 375 | 7 751 | 1 789 | ||
| 2004 2Q | December 31, 2009 | 11.79 | 5 850 | 4 550 | 21 587 | 16 790 | ||
| 2005 2Q | December 31, 2010 | 12.79 | 3 750 | 8 250 | 10 088 | 22 193 | ||
| 2005 4Q | December 31, 2010 | 14.48 | 0 | 28 000 | 0 | 28 000 | ||
| 2006 2Q | December 31, 2011 | 18.02 | 0 | 80 000 | 0 | 0 | ||
| Simon Beresford-Wylie | 2001 A/B | December 31, 2006 | 36.75 | 14 000 | 0 | 0 | 0 | |
| December 31, 2006 | 26.67 | 7 000 | 0 | 0 | 0 | |||
| 2002 A/B | December 31, 2007 | 17.89 | 0 | 0 | 0 | 0 | ||
| 2003 2Q | December 31, 2008 | 14.95 | 10 558 | 2 442 | 5 596 | 1 294 | ||
| 2004 2Q | December 31, 2009 | 11.79 | 5 625 | 4 375 | 20 756 | 16 144 | ||
| 2005 2Q | December 31, 2010 | 12.79 | 18 750 | 41 250 | 50 438 | 110 963 | ||
| 2006 2Q | December 31, 2011 | 18.02 | 0 | 100 000 | 0 | 0 | ||
| Mary McDowell | 2003 4Q | December 31, 2008 | 15.05 | 48 125 | 21 875 | 20 694 | 9 406 | |
| 2004 2Q | December 31, 2009 | 11.79 | 28 125 | 21 875 | 103 781 | 80 719 | ||
| 2005 2Q | December 31, 2010 | 12.79 | 18 750 | 41 250 | 50 438 | 110 963 | ||
| 2006 2Q | December 31, 2011 | 18.02 | 0 | 100 000 | 0 | 0 | ||
| Hallstein Moerk | 2001 A/B | December 31, 2006 | 36.75 | 30 000 | 0 | 0 | 0 | |
| December 31, 2006 | 26.67 | 15 000 | 0 | 0 | 0 | |||
| 2002 A/B | December 31, 2007 | 17.89 | 30 000 | 0 | 0 | 0 | ||
| 2003 2Q | December 31, 2008 | 14.95 | 16 250 | 3 750 | 8 613 | 1 988 | ||
| 2004 2Q | December 31, 2009 | 11.79 | 3 750 | 13 125 | 13 838 | 48 431 | ||
| 2005 2Q | December 31, 2010 | 12.79 | 12 500 | 27 500 | 33 625 | 73 975 | ||
| 2006 2Q | December 31, 2011 | 18.02 | 0 | 60 000 | 0 | 0 | ||
| Tero Ojanperä | 2001 A/B | December 31, 2006 | 36.75 | 12 500 | 0 | 0 | 0 | |
| December 31, 2006 | 26.67 | 6 250 | 0 | 0 | 0 | |||
| 2002 A/B | December 31, 2007 | 17.89 | 14 500 | 0 | 0 | 0 | ||
| 2003 2Q | December 31, 2008 | 14.95 | 13 000 | 3 000 | 6 890 | 1 590 | ||
| 2004 2Q | December 31, 2009 | 11.79 | 5 625 | 4 375 | 20 756 | 16 144 | ||
| 2005 2Q | December 31, 2010 | 12.79 | 12 500 | 27 500 | 33 625 | 73 975 | ||
| 2006 2Q | December 31, 2011 | 18.02 | 0 | 60 000 | 0 | 0 | ||
| Niklas Savander | 2001 A/B | December 31, 2006 | 36.75 | 12 500 | 0 | 0 | 0 | |
| December 31, 2006 | 26.67 | 6 250 | 0 | 0 | 0 | |||
| 2002 A/B | December 31, 2007 | 17.89 | 21 500 | 0 | 0 | 0 | ||
| 2003 2Q | December 31, 2008 | 14.95 | 10 558 | 2 442 | 5 596 | 1 294 | ||
| 2004 2Q | December 31, 2009 | 11.79 | 5 760 | 4 480 | 21 254 | 16 531 | ||
| 2005 2Q | December 31, 2010 | 12.79 | 4 375 | 9 625 | 11 769 | 25 891 | ||
| 2006 2Q | December 31, 2011 | 18.02 | 0 | 60 000 | 0 | 0 | ||
| Richard Simonson | December 31, 2006 | 20.61 | 36 000 | 0 | 0 | 0 | ||
| 2002 A/B | December 31, 2007 | 17.89 | 15 000 | 0 | 0 | 0 | ||
| 2003 2Q | December 31, 2008 | 14.95 | 9 337 | 2 163 | 4 949 | 1 146 | ||
| 2004 2Q | December 31, 2009 | 11.79 | 28 125 | 21 875 | 103 781 | 80 719 | ||
| 2005 2Q | December 31, 2010 | 12.79 | 18 750 | 41 250 | 50 438 | 110 963 | ||
| 2006 2Q | December 31, 2011 | 18.02 | 0 | 100 000 | 0 | 0 | ||
| Veli Sundbäck | 2001 A/B | December 31, 2006 | 36.75 | 40 000 | 0 | 0 | 0 | |
| December 31, 2006 | 26.67 | 20 000 | 0 | 0 | 0 | |||
| 2002 A/B | December 31, 2007 | 17.89 | 40 000 | 0 | 0 | 0 | ||
| 2003 2Q | December 31, 2008 | 14.95 | 40 625 | 9 375 | 21 531 | 4 696 | ||
| 2004 2Q | December 31, 2009 | 11.79 | 16 875 | 13 125 | 62 269 | 48 431 | ||
| 2005 2Q | December 31, 2010 | 12.79 | 12 500 | 27 500 | 33 625 | 73 975 | ||
| 2006 2Q | December 31, 2011 | 18.02 | 0 | 60 000 | 0 | 0 | ||
| Anssi Vanjoki | 2001 A/B | December 31, 2006 | 36.75 | 70 000 | 0 | 0 | 0 | |
| December 31, 2006 | 26.67 | 35 000 | 0 | 0 | 0 | |||
| 2002 A/B | December 31, 2007 | 17.89 | 6 250 | 0 | 0 | 0 | ||
| 2003 2Q | December 31, 2008 | 14.95 | 40 000 | 18 750 | 21 200 | 9 938 | ||
| 2004 2Q | December 31, 2009 | 11.79 | 20 000 | 26 250 | 73 800 | 96 863 | ||
| 2005 2Q | December 31, 2010 | 12.79 | 10 000 | 41 250 | 26 900 | 110 963 | ||
| 2006 2Q | December 31, 2011 | 18.02 | 0 | 100 000 | 0 | 0 | ||
| Kai Öistämö | 2001 A/B | December 31, 2006 | 36.75 | 2 695 | 0 | 0 | 0 | |
| December 31, 2006 | 26.67 | 2 695 | 0 | 0 | 0 | |||
| 2002 A/B | December 31, 2007 | 17.89 | 1 892 | 0 | 0 | 0 | ||
| 2003 2Q | December 31, 2008 | 14.95 | 1 436 | 2 163 | 761 | 1 146 | ||
| 2004 2Q | December 31, 2009 | 11.79 | 3 625 | 4 375 | 13 376 | 16 144 | ||
| 2005 2Q | December 31, 2010 | 12.79 | 4 000 | 8 800 | 10 760 | 23 672 | ||
| 2005 4Q | December 31, 2010 | 14.48 | 0 | 28 000 | 0 | 28 000 | ||
| 2006 2Q | December 31, 2011 | 18.02 | 0 | 100 000 | 0 | 0 | ||
| Stock options held by the members of the Group Executive Board on December 31, 2006, Total 5 | 1 420 031 | 1 827 915 | 1 097 132 | 1 584 755 | ||||
| All outstanding stock option plans (global plans), Total | 68 744 405 | 22 911 996 | 27 319 485 | 26 518 296 | ||||
1 Stock options granted under the 2001A/B, 2001 3Q/01 and 2001C 4Q/01 sub-categories expired as of December 31, 2006.
2 Number of stock options equals the number of underlying shares represented by the option entitlement. Stock options vest over 4 years: 25% after one year and 6.25% each quarter thereafter.
3 The intrinsic value of the stock options is based on the difference between the exercise price of the options and the closing market price of Nokia shares on the Helsinki Stock Exchange as of December 29, 2006 of EUR 15.48.
4 For gains realized upon exercise of stock options for the members of the Group Executive Board please refer to “Stock options exercises and settlement of shares” table on page 84 of “Nokia in 2006”.
5 Mr. Ollila resigned as CEO and Chairman of the Group Executive Board effective June 1, 2006, and ceased employment with Nokia on that date. Mr. Korhonen resigned as member of the Group Executive Board effective April 1, 2006 and ceased employment with Nokia on May 31, 2006. The information relating to stock options held and retained by Mr. Ollila and Mr. Korhonen as of the date of resignation from the Group Executive Board is represented in the table below.
| Number of stock options 2 | Total intrinsic value of stock options, December 31, 2006 | |||||||
| Stock option category 1 | Expiration date | Exercise price per share EUR | Exercisable | Unexercisable | Exercisable 4 | Unexercisable | ||
| Jorma Ollila (as per May 31, 2006) 6 | 2001 A/B | December 31, 2006 | 36.75 | 1 000 000 | 0 | 0 | 0 | |
| December 31, 2006 | 26.67 | 0 | 0 | 0 | 0 | |||
| 2002 A/B | December 31, 2007 | 17.89 | 937 500 | 62 500 | 0 | 0 | ||
| 2003 2Q | December 31, 2008 | 14.95 | 550 000 | 250 000 | 968 000 | 440 000 | ||
| 2004 2Q | December 31, 2009 | 11.79 | 175 000 | 225 000 | 861 000 | 1 107 000 | ||
| 2005 2Q | December 31, 2010 | 12.79 | 0 | 400 000 | 0 | 1 568 000 | ||
| 2006 2Q | December 31, 2011 | 18.02 | 0 | 400 000 | 0 | 0 | ||
| Pertti Korhonen (as per March 31, 2006) 7 | 2001 A/B | December 31, 2006 | 36.75 | 30 000 | 0 | 0 | 0 | |
| December 31, 2006 | 26.67 | 15 000 | 0 | 0 | 0 | |||
| 2002 A/B | December 31, 2007 | 17.89 | 61 250 | 8 750 | 0 | 0 | ||
| 2003 2Q | December 31, 2008 | 14.95 | 31 250 | 18 750 | 66 563 | 39 938 | ||
| 2004 2Q | December 31, 2009 | 11.79 | 18 750 | 31 250 | 99 188 | 165 313 | ||
| 2005 2Q | December 31, 2010 | 12.79 | 0 | 60 000 | 0 | 257 400 | ||
6 Mr. Ollila was entitled to retain all vested and unvested stock options granted to him prior to June 1, 2006 as approved by the Board of Directors.
7 Mr. Korhonen’s stock option grants were forfeited upon termination of employment in accordance with the plan rules.
8 The intrinsic value of the stock options is based on the difference between the exercise price of the options and the closing market price of Nokia shares on the Helsinki Stock Exchange as of May 31, 2006 of EUR 16.71 in respect of Mr. Ollila and as of March 31, 2006 of EUR 17.08 in respect of Mr. Korhonen.
Performance Shares and Restricted Shares
The following table provides certain information relating to performance shares and restricted shares held by members of the Group Executive Board as of December 31, 2006. These entitlements were granted pursuant to our performance share plans 2004, 2005 and 2006 and restricted share plans 2003, 2004, 2005 and 2006.
| Performance shares | Restricted shares | |||||||
| Plan name1 | Number of performance shares at threshold 2 | Number of performance shares at maximum2 | Intrinsic value performance December 31,2006 3 EUR | Plan name4 | Number of Restricted Shares | Intrinsic value December 31, 2006 5 EUR | ||
| Olli Pekka Kallasvuo | 2004 | 536 255 | 2004 | 541 200 | ||||
| 2005 | 881 715 | 2005 | 1 083 600 | |||||
| 2006 | 75 000 | 300 000 | 2 987 751 | 2006 | 100 000 | 1 548 000 | ||
| Robert Andersson | 2004 | 7 800 | 92 951 | 2004 | 232 200 | |||
| 2005 | 12 000 | 176 343 | 2005 | 433 440 | ||||
| 2006 | 20 000 | 80 000 | 796 734 | 2006 | 20 000 | 309 600 | ||
| Simon Beresford Wylie | 2004 | 7 500 | 89 376 | 2004 | 0 | 0 | ||
| 2005 | 60 000 | 881 715 | 2005 | 541 800 | ||||
| 2006 | 25 000 | 100 000 | 995 917 | 2006 | 25 000 | 387 000 | ||
| Mary McDowell | 2004 | 37 500 | 446 879 | 2003 | 309 600 | |||
| 2005 | 60 000 | 881 715 | 2005 | 35 000 | 541 800 | |||
| 2006 | 25 000 | 100 000 | 995 917 | 2006 | 25 000 | 387 000 | ||
| Hallstein Moerk | 2004 | 22 500 | 268 128 | 2004 | 309 600 | |||
| 2005 | 40 000 | 587 810 | 2005 | 387 000 | ||||
| 2006 | 15 000 | 60 000 | 597 550 | 2006 | 15 000 | 232 200 | ||
| Tero Ojanperä | 2004 | 7 500 | 89 376 | 2004 | 232 200 | |||
| 2005 | 40 000 | 587 810 | 2005 | 387 000 | ||||
| 2006 | 15 000 | 60 000 | 597 550 | 2006 | 15 000 | 232 200 | ||
| Niklas Savander | 2004 | 2 560 | 7 680 | 91 521 | 2004 | 16 500 | 255 420 | |
| 2005 | 3 500 | 14 000 | 205 734 | 2005 | 25 000 | 387 000 | ||
| 2006 | 15 000 | 60 000 | 597 550 | 2006 | 15 000 | 232 200 | ||
| Richard Simonson | 2004 | 37 500 | 446 879 | 2004 | 387 000 | |||
| 2005 | 60 000 | 881 715 | 2005 | 541 8000 | ||||
| 2006 | 25 000 | 100 000 | 995 917 | 2006 | 387 000 | |||
| Veli Sundbäck | 2004 | 22 500 | 268 128 | 2004 | 309 600 | |||
| 2005 | 40 000 | 587 810 | 2005 | 387 000 | ||||
| 2006 | 15 000 | 60 000 | 597 550 | 2006 | 15 000 | 232 200 | ||
| Anssi Vanjoki | 2004 | 45 000 | 536 255 | 2004 | 541 800 | |||
| 2005 | 60 000 | 881 715 | 2005 | 541 800 | ||||
| 2006 | 25 000 | 100 000 | 995 917 | 2006 | 25 000 | 387 000 | ||
| Kai Öistämö | 2004 | 7 500 | 89 376 | 2004 | 232 200 | |||
| 2005 | 12 800 | 188 099 | 2005 | 387 000 | ||||
| 2006 | 25 000 | 100 000 | 995 917 | 2006 | 25 000 | 387 000 | ||
| Performance shares and restricted shares held by the Group Executive Board, Total 6 | 477 360 | 1 826 780 | 20 851 577 | 884 500 | 13 692 060 | |||
| All outstanding performance shares and restricted shares (Global plans), Total | 12 311 989 | 45 798 454 | 544 183 057 | 5 985 476 | 92 655 168 | |||
1 The performance period for the 2004 plan is 2004–2007, with one interim measurement period for fiscal years 2004–2005. The performance period for the 2005 plan is 2005–2008, with one interim measurement period for fiscal years 2005–2006. The performance period for the 2006 plan is 2006–2008, without any interim measurement period.
2 For the performance share plans 2004, 2005 and 2006, the number of performance shares at threshold represents the number of performance shares granted. This number will vest as Nokia shares should the pre-determined threshold performance levels of Nokia be met. The maximum number of Nokia shares will vest should the predetermined maximum performance levels be met. The maximum number of performance shares equals four times the number originally granted at threshold. Due to the interim payout in 2006, the maximum number of Nokia shares deliverable under the 2004 plan is equal to three times the number at threshold.
3 The intrinsic value is based on the closing market price of a Nokia share on the Helsinki Stock Exchange as of December 29, 2006 of EUR 15.48. The value of performance shares is presented on the basis of the company’s estimation of the number of shares expected to vest.
4 Under the restricted share plans 2003, 2004, 2005 and 2006 awards are granted once a quarter. For the major part of the awards made under these plans the restriction period ends for the 2003 plan, on October 1, 2006; for the 2004 plan, on October 1, 2007; for the 2005 plan, on October 1, 2008; and for the 2006 plan, on October 1, 2009.
5 The intrinsic value is based on the closing market price of a Nokia share on the Helsinki Stock Exchange as of December 29, 2006 of EUR 15.48.
6 Mr. Ollila resigned as CEO and Chairman of the Group Executive Board effective June 1, 2006, and ceased employment with Nokia on that date. Mr. Korhonen resigned as member of the Group Executive Board effective April 1, 2006 and ceased employment with Nokia on May 31, 2006. The information relating to performance shares and restricted shares held by Mr. Ollila and Mr. Korhonen as of the date of resignation from the Group Executive Board is represented in the table below.
| Performance shares | Restricted shares | |||||||
| Plan name1 | Number of performance shares at threshold 2 | Number of performance shares at maximum 2 | Intrinsic value 9 EUR | Plan name4 | Number of Restricted Shares | Intrinsic value 10 EUR | ||
| Jorma Ollila (as per 31,2006) 7 | 2004 | 2 316 314 | 2004 | 1 671 000 | ||||
| 2005 | 5 160 441 | 2005 | 1 671 000 | |||||
| 2006 | 3 342 000 | 2006 | 1 671 000 | |||||
| Pertti Korhonen (as per 31,2006) 8 | 2003 | 35 000 | 597 800 | |||||
| 2004 | 12 500 | 37 500 | 295 950 | 2004 | 427 000 | |||
| 2005 | 60 000 | 791 206 | 2005 | 597 800 | ||||
7 Mr. Ollila was entitled to retain performance shares and restricted shares granted to him prior to June 1, 2006 as approved by the Board of Directors.
8 Mr. Korhonen’s performance share and restricted share grants were forfeited upon termination of employment in accordance with the plan rules.
9 The intrinsic value is based on the closing market price of Nokia shares on the Helsinki Stock Exchange as of May 31, 2006 of EUR 16.71 in respect of Mr. Ollila and as of March 31, 2006 of EUR 17.08 in respect of Mr. Korhonen. The value of performance shares is presented on the basis of the company’s estimation of the number of shares expected to vest.
10 The intrinsic value is based on the closing market price of Nokia share on the Helsinki Stock Exchange as of May 31, 2006 of EUR 16.71 in respect of Mr. Ollila and as of March 31, 2006 of EUR 17.08 in respect of Mr. Korhonen.
Nokia's equity based compensation programs
For a description of Nokia’s equity based compensation programs as of December 31, 2006 to which also members of the Group Executive Board participate, please see pages 77-78 in “Nokia in 2006”.
Equity-based compensation program 2007
The Board of Directors announced the proposed scope and design for the 2007 Equity Program on January 25, 2007. The main equity instrument will be performance shares. In addition, stock options will be granted to a more limited population, and restricted shares will be used for a small number of high potential and critical employees.
The Performance Share Plan in 2007 approved by the Board of Directors will cover a performance period of three years (2007 – 2009) with no interim measurement period. No performance shares will vest unless Nokia’s performance reaches at least one of the threshold levels measured by two independent, predefined performance criteria:
- Average Annual Net Sales Growth: performance period 2007 – 2009, and
- Reported, basic EPS: 2009.
Achievement of the maximum performance for both criteria will result in the vesting of maximum of 12 million Nokia shares. Performance exceeding the maximum criteria does not increase the number of performance shares that will vest. Achievement of the threshold performance for both criteria will result in the vesting of approximately 3 million shares. If only one of the threshold levels of performance is achieved, only approximately 1.5 million of the performance shares will vest. If none of the threshold levels are achieved, then none of the performance shares will vest. For performance between the threshold and maximum performance levels, the vesting follows a linear scale. If the required performance levels are achieved, the vesting will take place in 2010. Until the Nokia shares are transferred and delivered, the recipients will not have any shareholder rights, such as voting or dividend rights associated with these performance shares.
The Board of Directors will make a proposal for Stock Option Plan 2007 to be approved by the shareholders at the Annual General Meeting on May 3, 2007. The stock option grants in 2007 are expected to be made primarily out of the Stock Option Plan 2007, which is proposed to be a four-year plan amounting to a maximum of 20 million stock options to be granted from 2007 to 2010. Each stock option would entitle the option holder to subscribe for one Nokia share. The exercise price of the stock options would be determined at the time of grant on a quarterly basis and would be based on the trade volume weighted average price of a Nokia share on the Helsinki Stock Exchange for the first whole week of the second month of the calendar quarter (i.e. February, May, August or November). The stock options would have a vesting schedule with a 25% vesting one year after grant and quarterly vesting thereafter. The subcategories of stock options expected to be issued under the plan would generally have a term of five years, with the last of the subcategories expiring as of December 31, 2015. The determination of exercise price is defined in the terms and conditions of the stock option plan to be presented for shareholders’ approval at the Annual General Meeting. The Board of Directors would not have right to amend the above described determination of exercise price.
The restricted shares to be granted under the Restricted Share Plan 2007 will have a three-year restriction period. The restricted shares will vest and the payable Nokia shares be delivered mainly in 2010, subject to fulfillment of the service period criteria. Recipients will not have any shareholder rights or voting rights during the restriction period, until the Nokia shares are transferred and delivered to plan participants at the end of the restriction period.
The maximum number of planned grants under the 2007 Equity Program (i.e. performance shares, stock options and restricted shares) are set forth in the table below. The planned amounts for 2007 are less than the total amounts approved and disclosed in 2006.
| Plan type | Maximum number of planned grants under the 2007 Equity Program in 2007 |
| Stock options | 5 million |
| Restricted shares | 4 million |
| Performance shares at threshold 1 | 3 million |
1 The maximum number of shares to be delivered at maximum performance is four times the number originally granted (at threshold), i.e. a total of 12 million Nokia shares.
As of December 31, 2006, the total dilutive effect of Nokia’s stock options, performance shares and restricted shares outstanding, assuming full dilution, was approximately 3.4% in the aggregate. The potential maximum effect of the proposed equity program 2007. would be approximately another 0.8%.
Stock ownership guidelines for executive management
One of the goals of our long-term equity-based incentive program is to focus executives on building value for shareholders. In addition to granting them stock options, performance shares and restricted shares, we also encourage stock ownership by our top executives. Since January 2001, we have stock ownership commitment guidelines with minimum recommendations tied to annual base salaries. For the members of the Group Executive Board, the recommended minimum investment in Nokia’s shares corresponds to two times the member’s annual base salary. For Olli- Pekka Kallasvuo the recommended minimum investment in Nokia’s shares is three times his annual base salary. To meet this requirement, all members are expected to retain after-tax equity gains in shares until the minimum investment level is met.
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