Stock Exchange Release
January 29, 2015 at 8.45 (CET +1)
Espoo, Finland – Nokia announced today that Nokia’s Board of Directors has approved the Nokia Equity Program 2015. In line with previous years, the Nokia Equity Program 2015 includes the following equity instruments:
- An Employee Share Purchase Plan for Nokia employees in selected jurisdictions, entitling the eligible employees to contribute a part of their salary to purchase Nokia shares. After a 12-month holding period, Nokia will offer the employees one matching share for every two purchased shares that continue to be held by the employees as at the end of the holding period;
- Performance Shares, which are dependent on the achievement of independent performance criteria; and
- Restricted Shares, which are used on a highly limited basis and only in exceptional retention and recruitment circumstances.
Nokia Equity Program 2015
The Nokia Equity Program 2015 is designed to support the participants’ focus and alignment with the company’s strategy and long-term success. Nokia’s use of the Performance Shares as the main long-term incentive vehicle is intended to effectively contribute to the long-term value creation and sustainability of the company and to align the interests of the employees with those of the shareholders. It is also designed to ensure that the overall equity-based compensation is based on performance, while also ensuring the recruitment and retention of talent vital to the future success of Nokia.
Restricted Shares will be granted on an even more limited basis than in 2014 and only for exceptional retention and recruitment purposes, now primarily aimed at US markets, to ensure Nokia is able to retain and recruit talent vital to the future success of the company. Since 2014, stock options have no longer been part of the Nokia Equity Programs.
Employee Share Purchase Plan
Under the Employee Share Purchase Plan, the eligible Nokia employees may elect to make monthly contributions from their salary to purchase Nokia shares. Participation in the plan is voluntary.
The annual limit which the participant can contribute to the plan will be between the minimum of EUR 60 and the maximum of the lower of (1) EUR 1 200 or (2) 10 per cent of a participant’s annual gross base salary. Generally, the share purchases will be made at market value on pre-determined dates on a monthly basis during a 12-month period. In October 2016, Nokia will deliver one matching share for every two purchased shares that the participant still holds on July 31, 2016, which marks the end of the 2015 Employee Share Purchase Plan cycle. The aggregate maximum amount of contributions that employees can elect during the enrolment window for the plan cycle commencing in 2015 will be approximately EUR 30 million, which equals approximately 4 226 000 Nokia shares using the January 26, 2015 Nokia closing share price of EUR 7.10. Based on the matching ratio of one matching share for every two purchased shares, the number of matching shares would be approximately 2 113 000.
The Employee Share Purchase Plan is planned to be offered to Nokia employees in 46 countries for the plan cycle commencing in 2015. The savings period is intended to start in July 2015 and the first monthly purchases are planned to be made in August 2015.
Under the 2015 Performance Share Plan, target pay-out will depend on whether independent performance criteria have been met by the end of the performance period. The performance criteria vary for different employee groups in accordance with the following:
For the Nokia Group employees (excluding HERE employees), the performance criteria are Nokia continuing operations Average Annual Non-IFRS Net Sales and Nokia continuing operations Average Annual Non-IFRS EPS (diluted).
For HERE employees, the performance criteria are Nokia continuing operations Average Annual Non-IFRS EPS (diluted), HERE Average Annual Non-IFRS Net Sales and HERE Average Annual Non-IFRS Operating Profit.
The 2015 Performance Share Plan has a two-year performance period (2015-2016) and a subsequent one-year restriction period. The number of Performance Shares to be settled after the restriction period will start at 25 per cent of the grant amount and any pay-out beyond this will be determined with reference to the financial performance during the two-year performance period. The grant under Performance Share Plan 2015 could result in an aggregate maximum pay-out of 32.22 million Nokia shares in the event that maximum performance against all the performance criteria is achieved.
The Restricted Shares under the Restricted Share Plan 2015 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 grant of Restricted Shares in 2015 could result in an aggregate maximum payout of 750 000 Nokia shares.
Employees covered by the Equity Program 2015
In accordance with the previous year’s practice, the primary equity instruments for executive employees, as well as, directors below the executive level, are Performance Shares.
Nokia has decided to restrict the use of Restricted Shares so that shares under the Restricted Share Plan are granted only for exceptional retention and recruitment purposes, aimed primarily at US markets, to ensure Nokia is able to retain and recruit talent vital to the future success of the Group. The Restricted Shares will only be used in limited and exceptional circumstances.
Approximately 56 600 employees in 46 countries are planned to be offered the possibility to participate in the Employee Share Purchase Plan for the plan cycle commencing in 2015, provided that there are no local regulatory or administrative restraints in relation to the offer made under the plan.
As of December 31, 2014, the aggregate maximum dilution effect of Nokia’s currently outstanding equity programs, assuming that the Performance Shares would be delivered at maximum level, is approximately 1.37 per cent. The potential maximum effect of the Nokia Equity Program 2015 would additionally be approximately 0.96 per cent, assuming delivery at maximum level for Performance Shares and the delivery of matching shares against the maximum amount of contributions of approximately EUR 30 million under the Employee Share Purchase Plan.
Settlements under various Nokia equity plans
The performance period for the 2013 Performance Share Plan ended on December 31, 2014, and Nokia’s performance over 2013 and 2014, assessed against the independent performance criteria set out in the plan rules, was above the threshold performance level for the plan. The settlement to the participants under the plan will take place after the restriction period ends on January 1, 2016.
To fulfill the company’s obligations under the 2011 and 2012 Restricted Share Plans in respect of shares to be settled in 2015, Nokia’s Board of Directors has resolved to issue without consideration a total amount of 1 530 000 Nokia shares (NOK1V) held by the company to settle its commitment to plan participants, who are all employees of the Nokia Group.
Nokia invests in technologies important in a world where billions of devices are connected. We are focused on three businesses: network infrastructure software, hardware and services, which we offer through Nokia Networks; location intelligence, which we provide through HERE; and advanced technology development and licensing, which we pursue through Nokia Technologies. Each of these businesses is a leader in its respective field. http://company.nokia.com