Nokia 2011 Annual Report Download - page 157

directly for the Chairman of the Personnel Committee and meets annually with the Personnel
Committee, without management present, to provide an assessment of the competitiveness and
appropriateness of Nokia’s executive pay levels and programs. Management provides the consultant
with information regarding Nokia’s programs and compensation levels in preparation for meeting with
the Committee. The consultant of Mercer Human Resources that works for the Personnel Committee is
independent of Nokia and does not have any other business relationships with Nokia.
The Personnel Committee reviews the executive officers’ compensation on an annual basis, and from
time to time during the year when special needs arise. Without management present, the Personnel
Committee reviews and recommends to the Board the corporate goals and objectives relevant to the
compensation of the President and CEO, evaluates the performance of the President and CEO in light
of those goals and objectives, and proposes to the Board the compensation level of the President and
CEO. All compensation for the President and CEO, including long-term equity incentives, is approved
by the Board and is confirmed by the independent members of the Board. Management’s role is to
provide any information requested by the Personnel Committee to assist in their deliberations.
In addition, upon recommendation of the President and CEO, the Personnel Committee approves all
compensation for all the members of the Nokia Leadership Team (other than the President and CEO of
Nokia) and other executive level direct reports to the President and CEO, including long-term equity
incentives and goals and objectives relevant to compensation. The Personnel Committee also reviews
the results of the evaluation of the performance of the Nokia Leadership Team members (excluding the
President and CEO) and other executive level direct reports to the President and CEO and approves
their incentive compensation based on such evaluation.
The Personnel Committee considers the following factors, among others, in its review when
determining the compensation of Nokia’s executive officers or recommending the compensation of the
President and CEO to the Board:
• the compensation levels for similar positions (in terms of scope of position, revenues, number
of employees, global responsibility and reporting relationships) in relevant comparison
companies;
• the performance demonstrated by the executive officer during the last year;
• the size and impact of the particular officer’s role on Nokia’s overall performance and strategic
direction;
• the internal comparison to the compensation levels of the other executive officers of Nokia;
• past experience and tenure in role; and
• the potential and expected future contributions of the executive.
The above factors are assessed by the Personnel Committee in totality.
Nokia’s management performed an internal risk assessment of Nokia’s compensation policies and
practices for all its employees specifically to understand any potential risk factors that would be
associated with the changes made to Nokia’s compensation programs in 2011 in alignment to our new
strategy. Management assessed such factors as Nokia’s proportion of fixed compensation in relation to
variable compensation, the caps on incentive compensation that can be earned under our plans,
performance metrics tied to the incentive programs and the time horizon over which variable
compensation may be earned, as well as Nokia’s share ownership, severance and recoupment policies
and our overall governance structure and practices. Based on the assessment, management
concluded that there are no risks arising from Nokia’s compensation programs, policies and practices
or the changes implemented that are likely to have a material adverse effect on Nokia. The findings of
the analysis were reported to the Personnel Committee.
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