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March 30, 2005
TERMS AND CONDITIONS OF THE NOKIA
PERFORMANCE SHARE PLAN 2005
1. Definitions
Annual EPS or EPS: The annual Earnings Per Share or EPS number
(basic, reported) in the approved consolidated financial
accounts
for Nokia Group (IFRS) for fiscal years 2004, 2006, and 2008,
as
applicable, will be used for the measurement of the EPS growth,
which is one pre-determined financial performance criterion and
vesting condition under paragraph 4 below.
Average Annual Net Sales Growth: The Average Annual Net Sales
Growth, which is one pre-determined financial performance
criterion and vesting condition under paragraph 4 below, is
calculated as an average of the annual net sales growth rates
in
the approved consolidated financial accounts for Nokia Group
(IFRS) for the Interim Measurement Period or Performance
Period,
as applicable. The annual net sales figures for fiscal years
2004, 2005, 2006, 2007, and 2008, as applicable, will be used
for
the calculation of the Average Annual Net Sales Growth.
Grant Amount: The number of Units that will be allocated to a
Participant. The Grant Amount represents the Threshold Number
for
and is tied to either EPS Growth or Average Annual Net Sales
Growth, as indicated to the Participant at grant. The Grant
Amount equals the Threshold Number for each criterion. Under
the
Plan, the Participant shall receive two Grant Amounts of equal
size one tied to EPS criterion and one tied to Average Annual
Net
Sales Growth criterion.
Interim Measurement Period: The period comprising the fiscal
years 2005 and 2006. The measurement of the first payout during
the Performance Period under paragraph 4 will be based on
Nokia's
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 the
performance criterion, as determined in the Vesting Conditions
under paragraph 4.4. For each performance criterion, the
Maximum
Number of Units equals four times the Threshold Number or Grant
Amount.
Maximum Performance: The performance level, which is defined
for
each performance criterion under paragraph 4.4. The Maximum
Performance results in the Vesting of four times the Grant
Amount
or Threshold Number.
Participant: Eligible persons who, based on the grant
guidelines
approved by the Personnel Committee of the Board of Directors,
receive a grant of Performance Share Units under the Plan.
Performance Period: The period comprising the fiscal years 2005
through 2008. The fulfilment of the pre-determined performance
criteria as described under paragraph 4, is measured based on
Nokia's financial performance during this period. The two
separate, equally weighted performance criteria are Annual EPS
Growth and Average Annual Net Sales Growth.
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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, 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.
Share/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 the
performance
criteria, as determined in the Vesting conditions of the Plan
under paragraph 4. For each performance criterion separately,
the
Threshold Number equals the Grant Amount.
Threshold Performance: The minimum performance level, which
results in the Vesting of the Threshold Number or Grant Amount
of
Units of a grant as defined under paragraph 4 below.
Vesting: Represents the moment in time, when 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 dependant 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. Nokia will arrange for the delivery of the vested
Shares as soon as practicable after Vesting Date, as described
under paragraph 6 below.
Vesting Date: The Vesting Date is the date of the Annual
General
Meeting of Nokia in 2007 and 2009, respectively, as determined
by
Nokia. The Vesting Date represents the day in which a
participant
earns the shares, subject to the Vesting conditions as defined
in
paragraph 4. There will be two Vesting Dates, one after the
Interim Measurement Period and a second after the Performance
Period as defined under paragraph 6. As soon as practicable
after
Vesting Date, Nokia will arrange for the delivery of the vested
Shares as described under paragraph 6 below.
2. Purpose and
Scope of the Plan
Nokia Corporation ("Nokia") may grant under the Performance
Share
Plan 2005 (the "Plan") a maximum of 25.000.000 Nokia shares
(the
"Shares") to eligible participants, subject to the terms and
conditions and 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 guidelines 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.
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March 30, 2005
3. Grant of
Performance Share Units
At grant, each Participant will be offered a certain number of
Performance Share Units ("Grant Amount"). One Grant Amount is
tied to the EPS criterion and a separate Grant Amount tied to
the
Average Annual Net Sales criterion. 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. The fulfilment of
such
requirements and the compliance with such instructions given by
Nokia 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 ("Vesting"), as determined in the Vesting conditions
described below in this paragraph 4 and be subject to
Settlement
pursuant to paragraph 6 below, "Settlement of Grant".
4.2. Financial Performance
Criteria and Vesting
4.2.1. The Vesting of Units under the Plan is determined by the
financial performance of Nokia during the Performance Period
comprising the
fiscal years 2005 through 2008 ("Performance
Period").
4.2.2. Measurement of Nokia's performance during the
Performance
Period will be based on the approved consolidated financial
accounts of
Nokia Group (IRFS) as of the end of fiscal year 2008,
compared with those of 2004 and 2006.
4.2.3. If the Threshold Performance is not reached, no Units
shall be vested as Shares.
4.2.4. To the extent that the Threshold Performance is
exceeded,
the number of Units to vest will increase linearly up to the
achievement of the Maximum Performance.
4.2.5. After the close of the Interim Measurement Period, to
the
extent the Threshold Performance
