Board and Executive Remuneration
We manage our remuneration through clearly defined processes, with well-defined governance principles, ensuring that no individual is involved in the decision-making related to their own remuneration and that there is appropriate oversight of any compensation decision.
Our Remuneration Policy sets a framework and describes the key principles as well as the decision-making processes for the remuneration of Nokia’s governing bodies-, i.e. the Board of Directors and the President and CEO. In respect of other Group Leadership Team (GLT) members, the Personnel Committee of the Board approves and oversees their remuneration subject to the same Remuneration Policy framework, including share ownership requirement and clawback policy.
Remuneration Policy
The Remuneration Policy was presented to the Annual General Meeting 2020 for an advisory vote. Accordingly, the remuneration of the President and CEO as well as the Board of Directors shall be in line with this Policy as long as it remains in force. The updated Remuneration Policy is presented to the Annual General Meeting 2024. A remuneration policy will be presented to the Annual General Meeting at least every four years in line with the Finnish Corporate Governance Code.
Remuneration Report
The Remuneration Report will be annually presented to the shareholders for an advisory vote. The Remuneration Report describes the implementation of Nokia’s Remuneration Policy and provides information on the remuneration of the members of the Board of Directors and the President and CEO, during the preceding financial year.
Remuneration statement
The full Remuneration Statement included in our Nokia Annual Report includes further information on the remuneration of the Nokia Group Leadership Team and their aggregate paid remuneration for the preceding financial year, overview of our incentive plans as well as further information on the remuneration related decision-making and meetings of the Board’s Personnel Committee.
Remuneration of the Board of Directors
Remuneration of the Board is annually presented to shareholders for approval at the Annual General Meeting. The Corporate Governance and Nomination Committee prepares the proposal for the shareholders in line with the Corporate Governance guidelines and valid Remuneration Policy. The Committee also reviews the remuneration for the members of the Board against international companies of similar size and complexity, and aims to ensure that Nokia is able to attract and retain Board members from diverse backgrounds with relevant skills and international experience to oversee the company strategy with emphasis on long-term value creation.
The Annual General Meeting 2024 resolved on the Board remuneration for the term that ends at the close of the next Annual General Meeting as outlined in the below tables.
Remuneration summary of the Board of Directors |
|
|---|---|
Fees |
Fees consist of annual fees and meeting fees. Approximately 40% of the annual fee is paid in Nokia shares purchased from the market on behalf of the Board members or alternatively delivered as treasury shares held by the Company. The balance is paid in cash, most of which is typically used to cover taxes arising from the paid remuneration. Meeting fees are paid in cash. Meeting fees are paid to all Board members, including the Board Chair. |
Incentives |
Non-executive directors are not eligible to participate in any Nokia incentive plans and do not receive performance shares, restricted shares or any other equity-based or other form of variable compensation for their duties as members of the Board. |
Pensions |
Non-executive directors do not participate in any Nokia pension plans. |
Share ownership requirement |
Members of the Board shall normally retain until the end of their directorship such number of shares that corresponds to the number of shares they have received as Board remuneration during their first three years of service in the Board (the net amount received after deducting those shares needed to offset any costs relating to the acquisition of the shares, including taxes). |
Other |
Directors are compensated for travel and accommodation expenses as well as other costs directly related to Board and Committee work. This compensation is paid in cash. |
Annual fees |
EUR |
|---|---|
Chair |
440 000 |
Vice Chair |
210 000 |
Member |
185 000 |
Chair of Audit Committee |
30 000 |
Member of Audit Committee |
15 000 |
Chair of Personnel Committee |
30 000 |
Member of Personnel Committee |
15 000 |
Chair of Strategy Committee |
20 000 |
Member of Strategy Committtee |
10 000 |
Chair of Technology Committee |
20 000 |
Member of Technology Committee |
10 000 |
Meeting fee (paid for a maximum seven meetings per term) |
EUR |
Meeting requiring intercontinental travel |
5 000 |
Meeting requiring continental travel |
2 000 |
Information on the remuneration paid to the members of the Board of Directors during the previous financial year is included above in the Remuneration Report for 2023.
Remuneration of the President and CEO
The remuneration of the President and CEO is approved by the Board, upon the recommendation of the Personnel Committee in accordance with the Remuneration Policy. Pekka Lundmark started as President and CEO of Nokia on 1 August 2020. During 2021 and 2022 Pekka Lundmark did not receive any increase in his annual base salary (EUR 1 300 000). In the beginning of 2023, he received an increase of 3.5%. However in line with the company’s cost control efforts, Pekka Lundmark requested that his salary increase be cancelled as of 1 July 2023. In the beginning of 2024, Pekka Lundmark received an increase of 8.5% in his annual base salary in recognition of his performance.
The below table outlines the CEO pay overview for 2024. Further information is available in our Remuneration Policy, in the Remuneration Report and the Remuneration Statement.
Remuneration elements of the President and CEO in 2024 |
|
|---|---|
Annual base salary |
EUR 1 410 500 |
Short-term incentives |
Target award: 125% of base salary Measures: |
Long-term incentives |
Three-year performance share plan Target award: 200% of base salary Performance metric for 2021 Performance Shares: Performance metrics for 2024 Performance Shares: The co-investment arrangement(eLTI): Mr. Lundmark may be invited to invest up to two times his base salary in Nokia shares and is offered a matching award of two Performance Shares for each share invested. The invested shares must be held for three years from the date of the matching award for the matching shares to vest, which will be subject to performance conditions. |
Pension |
Contribution to the mandatory TyEL pension plan in Finland. |
Benefits & mobility |
Life and critical illness insurance, private medical insurance and company car. |
Share ownership requirement |
Target: 3 times base salary. |
The President and CEO’s share ownership and unvested share awards
Our share ownership policy requires that the President and CEO holds a minimum of three times his or her annual base salary in Nokia shares in order to ensure alignment with shareholder interests over the long term. Pekka Lundmark significantly exceeds this requirement, well within the five-year allotted period.
On 31.12.2023 Pekka Lundmark held in total 1 473 060 shares and he had been granted 2 910 980 unvested shares under the outstanding Nokia Long-term incentive plans. These unvested shares include the 2021, 2022, and 2023 Performance Shares and the 2021 eLTI grant of Performance Shares.
The President and CEO’s termination provisions
Termination by |
Reason |
Notice |
Compensation |
|---|---|---|---|
Nokia |
Cause |
None |
The President and CEO is entitled to no additional remuneration and all unvested equity awards would be forfeited after termination. |
Nokia |
Reasons other than cause |
Up to 12 months |
The President and CEO is entitled to a severance payment equaling up to 12 months’ remuneration (including annual base salary, benefits, and target short-term incentive) and unvested equity awards would be forfeited after termination. |
President and CEO |
Any reason |
12 months |
The President and CEO may terminate his service agreement at any time with 12 months’ notice. The President and CEO would either continue to receive salary and benefits during the notice period or, at Nokia’s discretion, a lump sum of equivalent value. Additionally, the President and CEO would be entitled to any short- or long-term incentives that would normally vest during the notice period. Any unvested equity awards would normally be forfeited after termination, with the exception that in the case of death, permanent disability and retirement, unvested equity awards would continue to vest at normal vesting date, subject to performance and time proration, unless the Board determines otherwise. |
President and CEO |
Nokia’s material breach of the service agreement |
Up to 12 months |
In the event that the President and CEO terminates his service agreement based on a final arbitration award demonstrating Nokia’s material breach of the service agreement, he is entitled to a severance payment equaling up to 12 months’ remuneration (including annual base salary, benefits and target incentive). Any unvested equity awards would be forfeited after termination. |
The President and CEO is subject to a 12-month non-competition and non-solicit obligation that applies after the termination of the service agreement or the date when he is released from his obligations and responsibilities, whichever occurs earlier.
Remuneration of the Group Leadership Team
Executives on the Group Leadership Team are subject to the same remuneration policy framework as the President and CEO. This includes being subject to clawback and shareholding requirements. The shareholding requirement for members of the Group Leadership Team is two times their annual base salary within five years from their appointment. The Personnel Committee has overall responsibility for evaluating and resolving the remuneration of the members of the Group Leadership Team (excluding the remuneration of the President and CEO, which is approved by the Board of Directors based on the recommendation of the Personnel Committee) and their terms of employment; ensuring that the remuneration is performance-based as a main rule and designed to contribute to long-term shareholder value creation and alignment to shareholders’ interests. As a general rule, the right to incentives always requires a valid contract of employment. The Group Leadership Team members’ average notice period is six months.
The remuneration of the Group Leadership Team members (excluding the President and CEO) consists of base salary, benefits, and short- and long-term incentives. Short-term incentive plans are based on rewarding the delivery of business performance utilizing certain, or all, of the following metrics as appropriate to the member’s role: Economic Profit, diversity, carbon emission reduction and defined strategic objectives.
The long-term incentive targets are set at the start of the performance period of the plan. The plans generally hold a three-year vesting period and the vesting is subject to continued employment.
The aggregate remuneration of the Group Leadership Team (excluding the President and CEO) in 2023 is presented in the table below:
2023 EURm(1) |
|
|---|---|
Salary, short-term incentives and other compensation(2) |
10.8 |
Long-term incentives(3) |
2.5 |
Total |
13.3 |
(1) The values represent each member’s time on the Group Leadership Team.
(2) Other compensation includes mobility related payments, local benefits and pension costs.
(3) The amounts represent the equity awards that vested in 2023.
The members of the Group Leadership Team (excluding the President and CEO) were awarded the following equity awards under the Nokia equity program in 2023:
Award |
Units awarded (1) |
Grant date |
Vesting |
|---|---|---|---|
Performance share award(2) |
1 858 500 |
6 July 2023 |
Q3 2026 |
Restricted share award(3) |
1 454 000 |
15 December 2023 |
Q4 2024, Q4, 2025 |
(1) Includes units awarded to persons who were Group Leadership Team members during 2023.
(2) The 2023 performance shares have a three-year performance period based on total shareholder return. The maximum payout is 200% subject to maximum performance against the performance criterion. Vesting is subject to continued employment.
(3) Vesting of the tranches of the restricted share award is conditional to continued employment.