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Nokia Board of Directors approves the Nokia Equity Program 2010
- Performance Shares - offered as the main equitybased incentive to approximately 4 500 employees;
- Stock options - used in conjunction with performance shares on a limited basis for senior managers; and
- Restricted Shares - granted on a highly selective basis to high potential and critical employees.
The Equity Program 2010, like Nokia equity programs of previous years, will focus on attracting, retaining and motivating critical talent. Similarly, it intends to align the potential value received by the participants directly with the longterm performance of the Company, thus aligning the participants' interests also with Nokia shareholders' interests. Nokia's balanced approach and use of the performancebased plan as the main longterm incentive vehicle effectively contribute to the longterm value sustainability of the Company and ensure that compensation is based on performance.
Under the Nokia Performance Share Plan 2010, Nokia shares will be delivered provided that the Company's performance reaches at least one of the required threshold levels measured by two independent performance criteria. The performance criteria are as follows:
Performance Criteria Threshold Maximum
Average annual net sales growth during the performance period 0% 13.5%
Earnings per share (EPS) (diluted, non-IFRS) in 2012 EUR 0.82 EUR 1.44
The Performance Share Plan 2010 has a threeyear performance period (2010-2012).
The grant of Performance Shares in 2010 may result in an aggregate maximum payout of 17 million Nokia shares, should the maximum level for both performance criteria be met.
As part of the Nokia Equity Program 2010, stock options will be granted under Nokia Stock Option Plan 2007 approved by the Annual General Meeting 2007. The total size of Nokia Stock Option Plan 2007 is 20 million stock options, which can be granted until December 31, 2010. The planned maximum number of stock options to be granted during 2010 is 8 million.
The Resticted Share Plan 2010 has a threeyear restriction period (2010 - 2012). The grant of Restricted Shares in 2010 may result in an aggregate maximum payout of 6 million Nokia shares.
As of December 31, 2009, the total maximum dilution effect of Nokia's equity incentives currently outstanding, assuming that the performance shares are delivered at maximum level, is approximately 1.6%. The potential maximum effect of the Nokia Equity Program 2010 will be approximately another 0.8%.
Policy on the recoupment of equity gains
The Board of Directors has approved a policy allowing for the recoupment of equity gains realized by Group Executive Board members under Nokia equity plans in case of a financial restatement caused by an act of fraud or intentional misconduct. This policy will apply to equity grants made to Group Executive Board members after January 1, 2010.
Settlements under various Nokia equity plans
There will be no settlement under the Performance Share Plan 2007 as neither of the threshold performance criteria of EPS and Average Annual Net Sales Growth of this plan were met.
To fulfill the Company's obligations under two other, more limited equitybased incentive plans, Nokia's Board of Directors has resolved to issue a total amount of 930 000 Nokia shares (NOK1V) held by the Company to settle its obligations to approximately 400 participants, employees of the Nokia Group.
It should be noted that certain statements herein which are not historical facts, including, without limitation, those regarding: A) the timing of product, services and solution deliveries; B) our ability to develop, implement and commercialize new products, services, solutions and technologies; C) our ability to develop and grow our consumer Internet services business; D) expectations regarding market developments and structural changes; E) expectations regarding our mobile device volumes, market share, prices and margins; F) expectations and targets for our results of operations; G) the outcome of pending and threatened litigation; H) expectations regarding the successful completion of contemplated acquisitions on a timely basis and our ability to achieve the set targets upon the completion of such acquisitions; and I) statements preceded by "believe," "expect," "anticipate," "foresee," "target," "estimate," "designed," "plans," "will" or similar expressions are forwardlooking statements. These statements are based on management's best assumptions and beliefs in light of the information currently available to it. Because they involve risks and uncertainties, actual results may differ materially from the results that we currently expect. Factors that could cause these differences include, but are not limited to: 1) the deteriorating global economic conditions and related financial crisis and their impact on us, our customers and endusers of our products, services and solutions, our suppliers and collaborative partners; 2) the development of the mobile and fixed communications industry, as well as the growth and profitability of the new market segments that we target and our ability to successfully develop or acquire and market products, services and solutions in those segments; 3) the intensity of competition in the mobile and fixed communications industry and our ability to maintain or improve our market position or respond successfully to changes in the competitive landscape; 4) competitiveness of our product, services and solutions portfolio; 5) our ability to successfully manage costs; 6) exchange rate fluctuations, including, in particular, fluctuations between the euro, which is our reporting currency, and the US dollar, the Japanese yen, the Chinese yuan and the UK pound sterling, as well as certain other currencies; 7) the success, financial condition and performance of our suppliers, collaboration partners and customers; 8) our ability to source sufficient amounts of fully functional components, subassemblies, software and content without interruption and at acceptable prices; 9) the impact of changes in technology and our ability to develop or otherwise acquire and timely and successfully commercialize complex technologies as required by the market; 10) the occurrence of any actual or even alleged defects or other quality, safety or security issues in our products, services and solutions; 11) the impact of changes in government policies, trade policies, laws or regulations or political turmoil in countries where we do business; 12) our success in collaboration arrangements with others relating to development of technologies or new products, services and solutions; 13) our ability to manage efficiently our manufacturing and logistics, as well as to ensure the quality, safety, security and timely delivery of our products, services and solutions; 14) inventory management risks resulting from shifts in market demand; 15) our ability to protect the complex technologies, which we or others develop or that we license, from claims that we have infringed third parties' intellectual property rights, as well as our unrestricted use on commercially acceptable terms of certain technologies in our products, services and solutions; 16) our ability to protect numerous Nokia, NAVTEQ and Nokia Siemens Networks patented, standardized or proprietary technologies from thirdparty infringement or actions to invalidate the intellectual property rights of these technologies; 17) any disruption to information technology systems and networks that our operations rely on; 18) developments under large, multiyear contracts or in relation to major customers; 19) the management of our customer financing exposure; 20) our ability to retain, motivate, develop and recruit appropriately skilled employees; 21) whether, as a result of investigations into alleged violations of law by some former employees of Siemens AG ("Siemens"), government authorities or others take further actions against Siemens and/or its employees that may involve and affect the carrierrelated assets and employees transferred by Siemens to Nokia Siemens Networks, or there may be undetected additional violations that may have occurred prior to the transfer, or violations that may have occurred after the transfer, of such assets and employees that could result in additional actions by government authorities; 22) any impairment of Nokia Siemens Networks customer relationships resulting from the ongoing government investigations involving the Siemens carrierrelated operations transferred to Nokia Siemens Networks; 23) unfavorable outcome of litigations; 24) allegations of possible health risks from electromagnetic fields generated by base stations and mobile devices and lawsuits related to them, regardless of merit; as well as the risk factors specified on pages 11-28 of Nokia's annual report on Form 20-F for the year ended December 31, 2008 under Item 3D. "Risk Factors." Other unknown or unpredictable factors or underlying assumptions subsequently proving to be incorrect could cause actual results to differ materially from those in the forwardlooking statements. Nokia does not undertake any obligation to publicly update or revise forwardlooking statements, whether as a result of new information, future events or otherwise, except to the extent legally required.
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