Nokia Board of Directors approves the Nokia Equity Program for 2019 and the issuance of shares held by the company
Stock Exchange Release
January 31, 2019 at 9:00 (CET +1)
Nokia Board of Directors approves the Nokia Equity Program for 2019 and the issuance of shares held by the company
Espoo, Finland - Nokia announced today that its Board of Directors has approved the company's equity program for 2019 designed to support and align the participants' focus with Nokia's strategy and long-term success. In line with previous years, the Nokia Equity Program for 2019 consists of a performance share plan, a restricted share plan and an employee share purchase plan. There are no more outstanding stock options granted under the Nokia stock option plans.
Performance Share Plan 2019
Nokia uses Performance Shares as the main long-term incentive instrument for executives and other eligible employees with the intention to effectively contribute to the long-term value creation and sustainability of the company and to align interests of the executives and employees with those of Nokia's shareholders. Performance Shares are also designed to ensure that the overall equity-based compensation is based on performance.
The 2019 Performance Share Plan has a three-year performance period (2019-2021). The pay-out in Nokia shares will depend on whether performance criteria have been met during the performance period. The performance criteria are earnings per share, free cash flow and revenue relative to market. For non-executive participants, 25 per cent of the Performance Shares granted in 2019 will settle after the performance period, regardless of the satisfaction of the applicable performance criteria. In case the applicable performance criteria are not satisfied, employees who are executives at the date of Performance Share grant in 2019 will not receive any settlement.
The awards under the 2019 Performance Share Plan could result in an aggregate maximum settlement of 74 million Nokia shares, in the event that maximum performance against all the performance criteria is achieved.
Restricted Share Plan 2019
Restricted Shares are granted to Nokia's executives and other eligible employees on a more limited basis than Performance Shares for purposes related to retention and recruitment to ensure Nokia is able to retain and recruit vital talent for the future success of the company.
Under the 2019 Restricted Share Plan, the Restricted Shares are divided into three tranches, each tranche consisting of one third of the Restricted Shares granted. The first tranche has a one-year restriction period, the second tranche a two-year restriction period, and the third tranche a three-year restriction period.
The awards under the 2019 Restricted Share Plan could result in an aggregate maximum settlement of 2.5 million Nokia shares.
Employee Share Purchase Plan 2019
Under the Employee Share Purchase Plan, the eligible Nokia Group employees may elect to make contributions from their monthly net salary to purchase Nokia shares. The 2019 Employee Share Purchase Plan is planned to be offered to Nokia employees in up to 72 countries, provided that there are no significant local regulatory or administrative restraints in relation to the Plan. Participation in the Plan is voluntary.
The share purchases are intended to be made at market value on pre-determined dates on a quarterly basis during a 12-month period. Nokia intends to deliver one matching share for every two purchased shares that the participant still holds on July 31, 2020.
The aggregate maximum amount of contributions that employees can make during the Plan cycle commencing in 2019 is approximately EUR 60 million, which equals approximately 10.6 million Nokia shares using the closing share price of EUR 5.68 on Nasdaq Helsinki on January 30, 2019. Accordingly, based on the matching ratio of one matching share for every two purchased shares, the number of matching shares would be approximately 5.3 million.
As of December 31, 2018, the aggregate maximum number of shares that could be issued under Nokia's outstanding equity programs and stock option rights, assuming the performance shares would be delivered at maximum level, represented approximately 2.68 per cent of Nokia's total number of shares (excluding the shares owned by Nokia Corporation). The potential maximum number of shares that could be issued under the Equity Program 2019 represents approximately an additional 1.47 percentage points, assuming delivery at maximum level for performance shares and the delivery of matching shares against the maximum amount of contributions of approximately EUR 60 million under the Employee Share Purchase Plan.
Share issuance resolution for the settlement of shares under previous Nokia equity plans
To fulfill Nokia's obligations under the 2015, 2016, 2017 and 2018 Restricted Share plans and the 2016 Performance Share plan in respect of shares to be settled in 2019, Nokia's Board of Directors has resolved to issue, without consideration, a maximum of 7.5 million Nokia shares held by the company to settle its commitments to plan participants.
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It should be noted that Nokia and its businesses are exposed to various risks and uncertainties and certain statements herein that are not historical facts are forward-looking statements. 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Factors, including risks and uncertainties that could cause these differences include, but are not limited to: 1) our strategy is subject to various risks and uncertainties and we may be unable to successfully implement our strategic plans, sustain or improve the operational and financial performance of our business groups, correctly identify or successfully pursue business opportunities or otherwise grow our business; 2) general economic and market conditions and other developments in the economies where we operate, including the timeline for the deployment of 5G and our ability to successfully capitalize on that deployment; 3) competition and our ability to effectively and profitably invest in new competitive high-quality products, services, upgrades and technologies and bring them to market in a timely manner; 4) our dependence on the development of the industries in which we operate, including the cyclicality and variability of the information technology and telecommunications industries and our own R&D capabilities and investments; 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11) our ability to successfully realize the expectations, plans or benefits related to any future collaboration or business collaboration agreements and patent license agreements or arbitration awards, including income to be received under any collaboration, partnership, agreement or arbitration award; 12) Nokia Technologies' ability to protect its IPR and to maintain and establish new sources of patent, brand and technology licensing income and IPR-related revenues, particularly in the smartphone market, which may not materialize as planned, 13) our dependence on IPR technologies, including those that we have developed and those that are licensed to us, and the risk of associated IPR-related legal claims, licensing costs and restrictions on use; 14) our exposure to direct and indirect regulation, including economic or trade policies, and the reliability of our governance, internal controls and compliance processes to prevent regulatory penalties in our business or in our joint ventures; 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23) the impact of litigation, arbitration, agreement-related disputes or product liability allegations associated with our business; 24) our ability to re-establish investment grade rating or maintain our credit ratings; 25) our ability to achieve targeted benefits from, or successfully implement planned transactions, as well as the liabilities related thereto; 26) our involvement in joint ventures and jointly-managed companies; 27) the carrying amount of our goodwill may not be recoverable; 28) uncertainty related to the amount of dividends and equity return we are able to distribute to shareholders for each financial period; 29) pension costs, employee fund-related costs, and healthcare costs; 30) our ability to successfully complete and capitalize on our order backlogs and continue converting our sales pipeline into net sales; and 31) risks related to undersea infrastructure, as well as the risk factors specified on pages 71 to 89 of our 2017 annual report on Form 20-F published on March 22, 2018 under "Operating and financial review and prospects-Risk factors" and in our other filings or documents furnished with the U.S. Securities and Exchange Commission. Other unknown or unpredictable factors or underlying assumptions subsequently proven to be incorrect could cause actual results to differ materially from those in the forward-looking statements. We do not undertake any obligation to publicly update or revise forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required.