Nokia 2007 Annual Report Download - page 101

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Annual Cash Compensation
Base salaries are targeted at globally competitive market levels.
Shortterm cash incentives are tied directly to performance and represent a significant portion of an
executive officer’s total annual cash compensation. The shortterm cash incentive opportunity is
expressed as a percentage of the executive officer’s annual base salary. These award opportunities
and measurement criteria are presented in the table below.
Measurement criteria for the shortterm cash incentive plan include those financial objectives that are
considered important measures of Nokia’s success in driving increased shareholder value. Financial
objectives are established which are based on a number of factors and are intended to be stretch
targets that, when achieved, we believe, will result in performance that will exceed that of our key
competitors in the high technology and telecommunications industries. The target setting, as well as
the weighting of each measure, also requires the Personnel Committee’s approval. The following table
reflects the measurement criteria that are established for the President and CEO and members of the
Group Executive Board and the relative weighting of each objective for the year 2007.
Incentive as a % of Annual Base Salary in 2007
Position
Minimum
Performance
Target
Performance
Maximum
Performance Measurement Criteria
President and CEO ......... 0% 100% 225%
(a) Financial Objectives
(includes targets for net
sales, operating profit and
operating cash flow
measures)
0% 25% 37.5%
(c) Total Shareholder
Return
(1)
(comparison made
with key competitors in the
high technology and
telecommunications
industries over one, three
and five year periods
0% 25% 37.5%
(d) Strategic Objectives
Total ................... 0% 150% 300%
Group Executive Board ..... 0% 75% 168.75%
(a) Financial Objectives
(includes targets for net
sales, operating profit and
operating cash flow); and
(b) Individual Strategic
Objectives
(as described
below)
0% 25% 37.5%
(c) Total Shareholder
Return
(1)(2)
Total ................... 0% 100% 206.25%
(1)
Total shareholder return reflects the change in Nokia’s share price during a respective time period
added with the value of dividends per share paid during the said period, divided by Nokia’s share
price at the beginning of the period. The calculation is the same also for each company in the said
peer group.
(2)
Only some members of the Group Executive Board are eligible for the additional 25% total share
holder return element.
The incentive payout is based on performance relative to targets set for each measurement criteria
100