Nokia 2007 Annual Report Download - page 108

Plan
Performance
period
Interim
measurement
period
1st (interim)
settlement
2nd (final)
settlement
2004 .................................. 20042007 20042005 2006 2008
2005 .................................. 20052008 20052006 2007 2009
2006 .................................. 20062008 N/A N/A 2009
2007 .................................. 20072009 N/A N/A 2010
Until the Nokia shares are delivered, the participants will not have any shareholder rights, such as
voting or dividend rights, associated with the performance shares. The performance share grants are
generally forfeited if the employment relationship terminates with Nokia prior to vesting.
Performance share grants are approved by the CEO at the end of the respective calendar quarter on
the basis of an authorization given by the Board of Directors. Approvals for performance share grants
to the CEO are made by the independent members of the Board of Directors. Approvals for
performance share grants to the other Group Executive Board members and other direct reports of
the CEO are made by the Personnel Committee.
Stock Options
Nokia’s global stock option plans in effect for 2007, including their terms and conditions, were
approved by the Annual General Meetings in the year when each plan was launched, i.e., in 2001,
2003, 2005 and 2007.
Each stock option entitles the holder to subscribe for one new Nokia share. Under the 2001 stock
option plan, the stock options were transferable by the participants. Under the 2003, 2005 and 2007
plans, the stock options are nontransferable. All of the stock options have a vesting schedule with a
25% vesting one year after grant, and quarterly vesting thereafter. The stock options granted under
the plans generally have a term of five years.
The exercise prices of the stock options are determined at the time of their grant on a quarterly basis.
The exercise prices are determined in accordance with a preagreed schedule after the release of
Nokia’s periodic financial results and are based on the trade volume weighted average price of a
Nokia share on the Helsinki Stock Exchange during the trading days of the first whole week of the
second month of the respective calendar quarter (i.e., February, May, August or November). Exercise
prices are determined on a oneweek weighted average to mitigate any shortterm fluctuations in
Nokia’s share price. The determination of exercise price is defined in the terms and conditions of the
stock option plan, which are approved by the shareholders at the respective Annual General Meeting.
The Board of Directors does not have the right to amend the abovedescribed determination of the
exercise price.
Stock option grants are approved by the CEO at the time of stock option pricing on the basis of an
authorization given by the Board of Directors. Approvals for stock option grants to the CEO are made
by the independent members of the Board of Directors. Approvals for stock option grants to the other
Group Executive Board members and for other direct reports of the CEO are made by the Personnel
Committee.
Restricted Shares
Since 2003, we have granted restricted shares to recruit, retain, reward and motivate selected high
potential employees, who are critical to the future success of Nokia. It is Nokia’s philosophy that
restricted shares will be used only for key management positions and other critical resources. The
outstanding global restricted share plans, including their terms and conditions, have been approved
by the Board of Directors.
All of our restricted share plans have a restriction period of three years after grant. Once the shares
vest, they are transferred and delivered to the participants. The restricted share grants are generally
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