1/25/13

Nokia Board of Directors approves the Nokia Equity Program 2013 and introduces a new Employee Share Purchase Plan as part of the Program


Nokia Corporation
Stock Exchange Release
January 24, 2013 at 13.30 (CET +1)

Espoo, Finland - Nokia announced that Nokia's Board of Directors has approved the Nokia Equity Program 2013. In addition to the equity instruments used in previous years, the Board of Directors approved the launch of a new Employee Share Purchase Plan. The Nokia Equity Program 2013 includes the following equity instruments:

- A new 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 designated holding period Nokia will offer the employees one matching share for each two purchased shares;

- Performance Shares, which are dependent on the achievement of two independent financial performance criteria;

- Restricted Shares, which are dependent on continued employment during a three-year restriction period and are used together with Performance Shares; and

- Stock Options, which are used on a more limited basis at the executive level.

The purpose of the Nokia Equity Program 2013
The Nokia Equity Program 2013 is designed to support the participants' focus and alignment with the company's strategy and targets. Nokia's use of the performance-based plan in conjunction with the restricted share plan as the main long-term incentive vehicles is planned 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.

The new Employee Share Purchase Plan
Under the Employee Share Purchase Plan, the eligible Nokia employees can elect to make monthly contributions from their salary to purchase Nokia shares. Participation in the plan is voluntary for the employees.

The annual limit which the participant can contribute to the plan will be between a minimum of EUR 60 and a maximum of the lower of (1) EUR 1 200 and (2) 10% 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. Nokia will offer one matching share for every two purchased shares the participant still holds after the last monthly purchase has been made in June 2014. The total maximum amount of employee contributions during the plan cycle commencing in 2013 will be approximately EUR 22 million, which equals approximately 6.3 million Nokia shares using the January 23, 2013 closing share price of EUR 3.49. Based on the matching ratio of one matching share for every two purchased shares, the number of matching shares would be 3.15 million. In addition, to encourage participation in the plan, Nokia will offer 20 free shares for every participant making the first three consecutive monthly share purchases in the first year.

The Employee Share Purchase Plan is planned to be offered to Nokia employees (excluding Nokia Siemens Networks' employees) in 27 countries for the plan cycle commencing in 2013. The first savings period is intended to start in June 2013 and the first monthly purchases are planned to be made in July 2013. Any future offers of the plan after the first plan cycle in 2013-2014 must be approved by the Board.

Performance Shares and Restricted Shares
Under the Performance Share Plan 2013, Nokia shares will be delivered provided that the financial performance reaches at least one of the required threshold levels measured by two independent performance criteria. The performance criteria are average annual net sales and average annual earnings per share for the performance period. The threshold and maximum levels for the Performance Share Plan 2013 are scheduled to be determined and disclosed during the first quarter of 2013. No Performance Shares will be granted under the plan prior to that. The plan has a two-year performance period (2013-2014) and a subsequent one-year restriction period. Accordingly, the amount of shares based on the financial performance during the two-year performance period will vest after 2015. The grant of Performance Shares in 2013 may result in an aggregate maximum payout of 32 million Nokia shares, should the maximum level for both performance criteria be met.

The Restricted Share Plan 2013 has a three-year restriction period. The grant of Restricted Shares in 2013 may result in an aggregate maximum payout of 16 million Nokia shares.

Stock Options
As part of the Nokia Equity Program 2013, stock options will be granted under the Nokia Stock Option Plan 2011 approved by the Annual General Meeting 2011. Stock options can be granted under the Stock Option Plan 2011 until the end of 2013 and they have a vesting period of 50% of stock options vesting three years after grant and the remaining 50% vesting four years from grant. The exercise price of the stock options is determined at the time of grant, on quarterly basis, in accordance with a pre-agreed schedule after the release of Nokia's periodic financial results. The planned maximum number of stock options to be granted during 2013 is approximately 11 million. The stock options to be granted in 2013 will expire on December 27, 2019.

Employees covered by the Equity Program 2013
Following last year's practice, the primary equity instruments for the executive employees are performance shares and stock options. For directors below the executive level, the primary equity instruments are performance shares and restricted shares. Below the director level, performance shares and restricted shares are used on a selective basis to ensure retention and recruitment of functional mastery and other employees deemed critical to Nokia's future success.

Approximately 38 500 employees in 27 countries are planned to be offered the possibility to participate in the Employee Share Purchase Plan for the plan cycle commencing in 2013, provided that there are no local regulatory or administrative restraints for the offer. Approximately 3 500 employees are expected to participate in the Nokia Performance Share Plan, Restricted Share Plan and Stock Option Plan in 2013.

Dilution effect
As of December 31, 2012, the total maximum dilution effect of Nokia's equity program currently outstanding, assuming that the performance shares would be delivered at maximum level, is approximately 2.5%. The potential maximum effect of the Nokia Equity Program 2013 would be approximately another 1.7%, again assuming the delivery at maximum level for performance shares, and the delivery of matching shares against the maximum amount of contributions of approximately EUR 22 million and the delivery of 20 free shares to the participants under the Employee Share Purchase Plan. The calculation for the Employee Share Purchase Plan is based on the January 23, 2013 Nokia closing share price of EUR 3.49.

Settlements under various Nokia equity plans
The performance period for the Performance Share Plan 2010 ended on December 31, 2012, and as the threshold performance criteria of EPS and average annual net sales growth were not met, there will be no settlement to the participants under the plan. To fulfill the Company's obligations under other, considerably more limited equity incentive plans, Nokia's Board of Directors has resolved to issue a total amount of 1 616 000 Nokia shares (NOK1V) held by the Company without consideration to settle its commitment to approximately 300 participants, employees of the Nokia Group.

About Nokia
Nokia is a global leader in mobile communications whose products have become an integral part of the lives of people around the world. Every day, more than 1.3 billion people use their Nokia to capture and share experiences, access information, find their way or simply to speak to one another. Nokia's technological and design innovations have made its brand one of the most recognized in the world. For more information, visit http://www.nokia.com/about-nokia.

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