NOKIA 1 (8)
TERMS AND CONDITIONS OF THE NOKIA PERFORMANCE SHARE PLAN 2004
1. Definitions
Annual EPS: The Annual Earnings Per Share number (basic,
reported) in the approved consolidated financial accounts
for Nokia Group (IAS) for fiscal years 2003, 2005, and 2007,
as applicable, will be used for the measurement of the EPS
growth, as one financial performance objective and vesting
condition under paragraph 4.2.
Average Annual Net Sales: The Annual Net Sales in the
approved consolidated financial accounts for Nokia Group
(IAS) for fiscal years 2003, 2005, and 2007, as applicable,
will be used for the calculation of the Average Annual Net
Sales Growth as one financial performance objective and
vesting condition under paragraph 4.2 below.
Combined Threshold Number: The number of Units to vest,
provided that the Threshold Performance is achieved with
respect to both of the Performance Criteria, as determined
in the Vesting conditions of the Plan under paragraph 4.2.
The Combined Threshold Number equals the Grant Amount.
Grant Amount: The number of Units that will be allocated to
a Participant in a grant. One half of the Grant Amount
represents the Threshold Number for EPS Growth, and one half
represents the Threshold Number for Net Sales Growth. The
Grant Amount equals the Combined Threshold Number.
Interim Measurement Period: The period comprising the fiscal
years 2004 and 2005. The measurement of the first payout
during the Performance Period under paragraph 4.2 and 4.3
will be based on the performance during the Interim
Measurement Period.
Maximum Number: The number of granted Units to vest,
provided that the Maximum Performance is achieved with
respect to either performance criteria, as determined in the
Vesting conditions under paragraph 4. For each Performance
Criteria, the Maximum Number of Units is equal to four times
the Threshold Number. The combined Maximum Number of Units
for Maximum Performance on both Performance Criteria, shall
not, however, exceed four times the Grant Amount.
Maximum Performance: The performance level, which is defined
for each Performance Criteria under paragraph 4.2. The
Maximum Performance results in the Vesting of four times the
Threshold Number.
Participant: Eligible persons who, based on the grant
guidelines approved by the Personnel Committee, receive a
grant of Performance Share Units under the Plan.
NOKIA 2 (8)
Performance Criteria: The pre-determined financial
objectives for the Plan, the measurement of which determines
whether granted Units shall vest as defined under paragraph
4.2. The two, equally weighted Performance Criteria are
annual EPS Growth and average annual Net Sales Growth.
Performance Period: The period comprising the fiscal years
2004 through 2007. The fulfillment of the pre-determined
Performance Criteria as described under paragraph 4.2, is
measured based on Nokia's financial performance during this
period.
Performance Share Unit or Unit: Each Participant is offered
at grant a number of Performance Share Units, equalling the
Grant Amount. The Units will vest as Shares for the
Participant to the extent of and subject to the Vesting
conditions under paragraph 4.2, and other restrictions under
these Plan Rules.
Plan Rules: This document as adopted by the Board of
Directors.
Settlement Date: The day of the settlement of the payouts
under the Plan. Subject to the Vesting conditions under
paragraph 4 below, there will be two Settlement Dates, one
after the Interim Measurement Period and a second after the
Performance Period as defined under paragraph 6. The
Settlement Date will be as soon as practicable after the
Vesting Date.
Shares: Nokia ordinary shares to be transferred to
Participants based on vested Units. Nokia may, however, in
its sole discretion, use for the settlement of vested Units
one or more of the ways of funding described under paragraph
6, including cash settlement.
Threshold Number: The number of Units to vest, provided that
the Threshold Performance is achieved with respect to either
of the performance criteria, as determined in the Vesting
conditions of the Plan under paragraph 4.2. For each
Performance Criteria, the Threshold Number is equal to
one-half of the Grant Amount.
Threshold Performance: The minimum performance level as
defined under paragraph 4.2, which results in the Vesting of
the Threshold Number of Units of a grant. For each
Performance Criteria, a Threshold Performance level is
established.
Vesting: The granted Units shall vest as Shares and the
Participant shall acquire the right to receive full
ownership of such number of Shares. The number of Units that
Vest will be dependent on the fulfilment of the Vesting
conditions under paragraph 4. The Vesting conditions will be
measured after the close of the Interim Measurement Period,
and the close of the Performance Period, as defined under
paragraph 4.3.
Vesting Date: The Vesting Date is the date of the Annual
General Meeting of Nokia in 2006 and 2008, respectively, as
determined by Nokia. The Vesting Date represents the day in
which a participant earns the shares, subject to the Vesting
conditions defined in paragraph 4.2. There will be two
Vesting Dates, one after the Interim Measurement Period and
a second after the Performance Period as defined under
paragraph 6.
2. Purpose and Scope of the Plan
Nokia Corporation ("Nokia") may grant under the Performance
Share Plan 2004 (the "Plan") a maximum of 17 000 000 Nokia
shares (the "Shares") to eligible participants, subject to
the terms and conditions and
NOKIA 3 (8)
other restrictions set out herein ("Plan Rules"). The
purpose of the Plan is to recruit, retain and motivate
selected personnel of Nokia Group, and to promote their
share ownership.
To comply with the purposes of the Plan, the Personnel
Committee of the Board of Directors of Nokia ("Personnel
Committee") shall determine the grant principles of the
Plan, as well as approve the eligible persons of Nokia Group
to receive grants under the Plan (the "Participants") from
time to time.
3. Grant of Performance Share Units
At grant, each Participant will be offered a certain number
of Performance Share Units ("Grant Amount"). The granted
Units will vest as Shares to the Participants, subject to
the Vesting conditions described below under paragraph 4,
and other terms and conditions under these Plan Rules.
In connection with the grant, the Participant may be
required to give Nokia such authorizations and consents, as
Nokia deems necessary in order to administer the Plan from
time to time. The fulfillment of such requirements,
including the instructions given by Nokia regarding the
acceptance of a grant, forms a precondition of a valid
grant.
4. Vesting Conditions of the Performance Share Units
4.1. Vesting and Settlement
The granted Units shall vest as Shares and the Participant
shall acquire the right to receive full ownership of such
number of Shares, as determined in the Vesting conditions
described below in this paragraph 4 ("Vesting") and be
subject to Settlement pursuant to paragraph 6 below,
"Settlement of Grant".
4.2. Performance Period and Financial Performance Criteria
The Vesting of Units under the Plan is determined by the
financial performance of Nokia during the Performance Period
comprising the fiscal years 2004 through 2007 ("Performance
Period").
The measurement of Nokia's performance during the
Performance Period will be based on the approved
consolidated financial accounts of Nokia Group (IAS) as of
the end of fiscal year 2003, compared with those of 2005 and
2007.
NOKIA 4 (8)
Threshold Performance
The Threshold Number, equalling one half of the Grant
Amount, shall vest, if Nokia's financial performance equals
either of the two pre-determined financial performance
criteria ("Performance Criteria") described below as
Threshold Performance.
The Threshold Performance level for each Performance
Criteria is as follows:
1) EPS Growth: Nokia's EPS (basic, reported) equals 0.84
at the end of 2007,
2) Net Sales Growth: Nokia's Average Annual Net Sales
Growth rate equals 4% at the end of 2007.
Maximum Performance
For each criterion, the Maximum Number of Units shall vest,
if Nokia's financial performance equals or exceeds the
pre-determined financial performance criteria described
below as Maximum Performance.
1) EPS Growth: Nokia's EPS (basic, reported) equals or
exceeds 1.18 EUR at the end of 2007
2) Net Sales Growth: Nokia's Average Annual Net Sales
Growth rate for the Performance Period equals or
exceeds 16%
To the extent that the Threshold Performance is exceeded,
the number of Units to vest will increase linearly up to the
Maximum Performance level. For a graphical depiction of the
vesting schedule, please consult tables A and B below.
NOKIA 5 (8)
The following table summarizes the Threshold Performance and
Maximum Performance for each Performance Criteria as well as
the number of Units being vested at each performance level
under the Plan:
------------------------------------------------ ------------------------------------------------
Threshold Performance Maximum Performance
-------------------------- ------------------------------------------------ ------------------------------------------------
Performance Metric Performance Criteria Number of Units Vesting Performance Criteria Number of Units Vesting
----------------------------------------------------------------------------------------------------------------------------
Interim Measurement Period
-------------------------- ----------------------- ------------------------ ----------------------- ------------------------
EPS in 2005 0.80 EUR Threshold Number (one 0.94 EUR Two times the
(basic, reported) half of the Grant Threshold Number *
Amount)
-------------------------- ----------------------- ------------------------ ----------------------- ------------------------
Average Annual Net Sales 4% Threshold Number (one 16% or higher Two times the
Growth Rate (2004-2005) half of the Grant Threshold Number *
Amount)
----------------------------------------------------------------------------------------------------------------------------
*) After the close of the Interim Measurement Period, the maximum total number of Units that may be vested, if any, may
not exceed the Grant Amount or Combined Threshold Number.
----------------------------------------------------------------------------------------------------------------------------
Performance Period
-------------------------- ----------------------- ------------------------ ----------------------- ------------------------
EPS in 2007 0.84 EUR Threshold Number (one 1.18 EUR Equal to four times
(basic, reported) half of the Grant the Threshold Number**)
Amount**))
-------------------------- ----------------------- ------------------------ ----------------------- ------------------------
Average Annual Net Sales 4% Threshold Number (one 16% or higher Equals four times the
Growth Rate (2004-2007) half of the Grant Threshold Number **)
Amount **)
----------------------------------------------------------------------------------------------------------------------------
**) For the full Performance Period, the total amount of shares to be vested, if any, may not exceed four times the Grant
Amount or the Combined Threshold Number, less any Shares delivered after the Interim Measurement Period.
----------------------------------------------------------------------------------------------------------------------------
Table A Table B
[GRAPHIC OMITTED] [GRAPHIC OMITTED]
NOKIA 6 (8)
4.3. Measurement and calculation of grant payout
The measurement of Nokia's performance under the Plan shall
be made after the close of the Interim Measurement Period as
well as after the Performance Period. Based on each of these
measurements, the number of Units being vested and Shares
shall be calculated, which calculation will always subject
to the approval of Nokia's financial accounts by the Annual
General Meeting of Shareholders for the relevant year.
Nokia shall carry out the measurement of Nokia's performance
and calculation of the number of Units being vested and
corresponding number of Shares under the Plan as well as the
payout in its sole discretion.
The calculation of the number of Units being vested shall
not result in fractional Shares. The number of Units vesting
shall be rounded to the nearest whole Share.
4.4. Vesting Date
The measurement and calculation will be confirmed on the day
of the Annual General Meeting of Nokia in 2006 and 2008, as
determined by Nokia ("Vesting Date"). The Vesting Date
represents the day in which a participant earns the Shares,
subject to the fulfilment of the Vesting conditions
determined in this paragraph. There will be two Vesting
Dates: one after the Interim Measurement Period and a second
after the Performance Period as defined under paragraph 6.
4.5. Interim and Final payout
The payout based on achievement during the Interim
Measurement Period shall not exceed the Grant Amount. The
portion of the payout after the close of the Interim
Measurement Period that would have, pursuant to the Vesting
conditions under 4.2 above, exceeded this limit, will be
paid out in 2008, if justified by the second measurement of
performance after the close of the Performance Period.
The final payout based on the achievement during the
Performance Period shall not exceed four times the Grant
Amount. The number of Units being vested shall be adjusted
by the number of Units delivered after the close of Interim
Measurement Period.
4.6. Changes in employment
If the employment of the Participant terminates prior to
Vesting Date for any reason other than early retirement,
retirement, permanent disability (as defined by Nokia at its
sole discretion), or death, the Participant will not acquire
ownership of the vested Shares and they will not be
transferred to the Participant's account on or about the
Settlement Date.
If the employment of the Participant terminates prior to
Vesting Date by reason of early retirement, retirement,
permanent disability (as defined by Nokia at its sole
discretion) or death, the ownership of the Vested Shares
will pass to the Participant and the Shares will be
transferred to the Participant's account at the Settlement
Date.
In cases of voluntary and/or statutory leave of absence of
the Participant, Nokia has the right to defer the Vesting
Date and Settlement Date
NOKIA 7 (8)
5. Prohibited transactions
The Participants are not entitled to enter into any
derivative agreement or any other corresponding financial
arrangement relating to the Units or Shares until the Shares
have been vested and transferred to the Participant after
the Vesting Date.
6. Settlement of Grant
Nokia may, in its sole discretion, use for the settlement of
the Units one or more of the following: newly issued Shares,
Nokia's own existing Shares (treasury shares), Shares
purchased from the open market, or, in lieu of Shares, cash
settlement.
As soon as practicable after Vesting Date and subject to the
fulfilment of the other Plan Rules, the Shares, and their
cash equivalent shall, as instructed by Nokia, be
transferred to the Participant's personal book-entry,
brokerage or bank account, provided that the Participant has
performed all the necessary actions to enable Nokia to
instruct such a transfer ("Settlement").
The participants shall not be entitled to any dividend or
have any voting rights or any other rights as a shareholder
to the Shares until and unless the Shares have been
transferred to the Participant at the applicable Settlement
Date.
7. Terms of employment
The grant of Performance Share Units does not constitute a
term or a condition of the Participant's employment
relationship with Nokia, nor does it form a part of the
Participant's employment contract under applicable local
laws. The granted Units do not form a part of the
Participant's salary or benefit of any kind.
8. Taxes and other Obligations
Pursuant to applicable laws, Nokia is or may be required to
collect withholding taxes, social security charges or fulfil
other employment related obligations upon making Grants to
Participants, or on the receipt or sale of the Shares by the
Participants. Nokia shall have the right to determine how
such collection, withholding and other measures are arranged
or carried out, including but not limited to potential sale
of the Shares for the fulfilment of such liability.
The Participants are personally responsible for any taxes
and social security charges associated with the Shares. The
Participants are advised to consult their own financial and
tax advisers (at their own expense) in connection with the
Grant of Units in order to verify their tax position.
9. Breach of the Plan Rules
The Participant shall comply with the Plan Rules in force
from time to time, as well as any instructions given by
Nokia regarding the Plan, including those regarding the
grants in paragraph 3 above. If the Participant breaches the
Plan Rules and/or any instructions given by Nokia regarding
the Plan, Nokia may at its discretion, at any time prior to
Vesting, rescind the Grant to a Participant who is in
breach.
NOKIA 8 (8)
10. Validity of the Plan
The Plan shall become valid and effective upon the adoption
by the Board. The Board may at any time amend, modify or
terminate the Plan and/or the Plan rules. The Board may make
such a resolution in its absolute discretion at any time,
including but not limited to situations where required
resolutions by Nokia's Annual General Meeting of
Shareholders are not received.
Such a resolution by the Board may also, as in each case
determined by the Board, affect the granted Units that are
then outstanding, but not settled.
11. Administration
Nokia shall administer the Plan in accordance with
instructions given by its Board of Directors or the
Personnel Committee, as the case may be. Nokia has the
authority to interpret and amend these Plan Rules. Nokia may
also amend these Plan Rules, adopt such other rules and
procedures, and take such other measures, as it shall deem
necessary or appropriate for the administration of the Plan.
Nokia has the right to determine the practical manner of
administration and settlement of the Grants, including but
not limited to the acquisition, issuance, sale, and transfer
of the Shares to the Participant. Furthermore, Nokia has the
right to require from the Participant the submission of such
information or contribution that is necessary for the
administration and settlement of the Grants.
12. Governing Law
The Plan is governed by Finnish law. Disputes arising out of
the Plan shall be settled by arbitration in Helsinki,
Finland in accordance with the Arbitration Rules of the
Finnish Central Chamber of Commerce.
13. Other Provisions
Any notices to the Participants relating to this Plan shall
be made electronically, in writing, or any other appropriate
manner as determined by Nokia.
The grant of Shares by Nokia to some Participants may be
limited and/or subject to additional terms and conditions
due to laws and other regulations applicable outside
Finland.
Nokia has the right to transfer globally within Nokia Group
and/or to an agent of Nokia Group any of the personal data
required for the administration of the Plan and the
settlement of the grants. The data may be administered and
processed either by Nokia or an agent authorized by Nokia in
the future. The Participant is entitled to request access to
data referring to the Participant's person, held by Nokia or
its agent and to request amendment or deletion of such data
in accordance with applicable laws, statutes or regulations.
In order to exercise these rights, the Participant must
contact Nokia Head Office Legal department in Espoo,
Finland.