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Nokia Board of Directors approves the Nokia Equity Program for 2016 and the issuance of shares held by the company
Nokia Corporation
Stock Exchange Release
February 11, 2016 at 08:30 (CET +1)
Espoo, Finland - Nokia announced today that its Board of Directors has approved the Nokia's equity program for 2016 (the "Equity Program 2016"). In line with previous years, t he Nokia Equity Program 2016 includes the following equity instruments:
The Equity Program 2016 is designed to support and align the participants' focus with Nokia's strategy and long-term success. Employees of Alcatel-Lucent, who have transferred to Nokia as part of the acquisition of Alcatel-Lucent, are also eligible to participate in the Equity Program 2016.
Nokia uses Performance Shares as the main long-term incentive vehicle with the intention of effectively contributing to the long-term value creation and sustainability of the company and to align interests of the employees with those of Nokia's shareholders. Performance Shares are also designed to ensure that the overall equity-based compensation is based on performance, while also supporting the recruitment and ensuring retention of vital talent for the future success of Nokia.
Restricted Shares are granted on a limited basis for exceptional purposes related to retention and recruitment, primarily in the United States, to ensure Nokia is able to retain and recruit vital talent for the future success of the company.
Since 2014, stock options have no longer been part of the Nokia Equity Programs.
Under the Employee Share Purchase Plan, the eligible Nokia employees may elect to make monthly contributions from their net salary to purchase Nokia shares. Participation in the plan is voluntary.
The annual minimum and maximum contribution limit to the Employee Share Purchase Plan is EUR 180 and EUR 1 200, respectively. 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 2017, Nokia intends to deliver one matching share for every two purchased shares that the participant still holds on July 31, 2017, which marks the end of the Employee Share Purchase Plan cycle for 2016. The aggregate maximum amount of contributions that employees can make during the enrolment window for the plan cycle commencing in 2016 will be approximately EUR 60 million, which equals approximately 11 494 253 Nokia shares using the February 8, 2016 Nokia closing price of EUR 5.22 on Nasdaq Helsinki. Based on the matching ratio of one matching share for every two purchased shares, the number of matching shares would be approximately 5 747 126. In addition, to welcome employees of Alcatel-Lucent who have transferred to Nokia as part of the acquisition of Alcatel-Lucent and to mark the beginning of the new Nokia Group, Nokia intends to offer 20 free shares for every participant making the first three consecutive share purchases in 2016.
The Employee Share Purchase Plan is planned to be offered to Nokia employees in up to 54 countries for the plan cycle commencing in 2016. The savings period is intended to start in July 2016 and the first monthly purchases are planned to be made in August 2016.
Under the 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 are Nokia's continuing operations average annual non-IFRS net sales and average annual non-IFRS earnings-per share (diluted).
The Performance Share plan of 2016 has a two-year performance period (2016-2017) 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 the Performance Share plan could result in an aggregate maximum pay-out of 51 million Nokia shares, in the event that maximum performance against all the performance criteria is achieved.
The Restricted Shares under the 2016 Restricted Share plan 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 2016 could result in an aggregate maximum payout of 1 350 000 Nokia shares.
In accordance with the previous year's practice, the primary equity instruments granted to executive employees and directors below the executive level are Performance Shares.
Nokia limits the use of Restricted Shares as means of compensation. However, to support the specific needs, practices and competitive market environment in the United States, restricted shares may be used, in conjunction with the use of performance shares, on a limited basis in the United States.
In addition, shares under the Restricted Share plan can be granted for exceptional retention or recruitment purposes, aimed primarily at US markets, to ensure Nokia is able to retain and recruit vital talent for the future success of Nokia.
Nokia employees in up to 54 countries are planned to be offered the possibility to participate in the Employee Share Purchase Plan for the cycle commencing in 2016, provided that there are no local regulatory or administrative restraints in relation to such plan.
Employees of Alcatel-Lucent who have transferred to Nokia as part of the acquisition of Alcatel-Lucent are included in equity plans under the Equity Program 2016.
On February 10, 2016, Nokia announced the final results of its subsequent offer period for outstanding Alcatel-Lucent securities. As of February 12, 2016, subject to and following the registration of new Nokia shares issued as consideration for the Alcatel-Lucent securities tendered into the subsequent French and/or U.S. offers, and consequently, included in the aggregate amount of Nokia shares, 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 0.86 per cent. The potential maximum dilution effect of the Equity Program 2016 would approximately be an additional 1.04 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 60 million under the Employee Share Purchase Plan. Employees of Alcatel-Lucent that have transferred as part of the acquisition of Alcatel-Lucent are only included in equity plans under the Equity Program 2016.
The performance period for the 2014 Performance Share Plan ended on December 31, 2015, and Nokia's performance over 2014 and 2015, 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 is planned to take place after the restriction period ends on January 1, 2017.
To fulfill Nokia's obligations under the 2012, 2013 and 2015 Restricted Share Plans as well as the 2013 Performance Share Plan in respect of shares to be settled in 2016, Nokia's Board of Directors has resolved to issue, without consideration, a total of 1 657 000 Nokia shares held by the company to settle its commitments to plan participants, who are all employees of the Nokia Group.
In accordance with the Memorandum of Understanding dated April 15, 2015 between Nokia and Alcatel-Lucent, as amended, Nokia has entered into liquidity agreements with beneficiaries of Alcatel-Lucent employee equity compensation arrangements who accepted to subscribe for the liquidity program for the exchange of their Alcatel Lucent shares resulting from Alcatel-Lucent equity instruments that they hold for Nokia shares in certain circumstances.
To fulfill Nokia's obligations under the aforementioned agreements, Nokia's Board of Directors has resolved, pursuant to the share issue authorization granted by the Extraordinary General Meeting of Nokia on December 2, 2015, to issue a maximum amount of 400 000 Nokia shares held by the company in the course of 2016 against contribution in kind in the form of the Alcatel-Lucent shares being exchanged for the Nokia shares. The exchange ratio applied in such exchanges is the same as the exchange ratio applied in Nokia's public exchange offer for Alcatel-Lucent securities, subject to certain adjustments in the event of certain financial transactions by Nokia or Alcatel-Lucent.
Nokia is a global leader in the technologies that connect people and things. Powered by the innovation of Bell Labs and Nokia Technologies, the company is at the forefront of creating and licensing the technologies that are increasingly at the heart of our connected lives.
With state-of-the-art software, hardware and services for any type of network, Nokia is uniquely positioned to help communication service providers, governments, and large enterprises deliver on the promise of 5G, the Cloud and the Internet of Things. www.nokia.com
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