CAPÍTULO 3 – Marco Referencial
3.1 La Quinta “Casa de recreo colonial en Lima”
Shares and share capital
Nokia Corporation (“Parent Company”) has one class of shares. Each share entitles the holder to one vote at General Meetings. At December 31, 2014 the share capital of Nokia Corporation is EUR 245 896 461.96 and the total number of shares issued is 3 745 044 246. At December 31, 2014 the total number of shares includes 96 900 800 shares owned by Group companies representing 2.6% of share capital and total voting rights. Under the Nokia Articles of Association, Nokia Corporation does not have minimum or maximum share capital or share par value. Authorizations
Authorization to issue shares and special rights entitling to shares
At the Annual General Meeting held on May 7, 2013 the shareholders authorized the Board of Directors to issue a maximum of 740 million shares through one or more issues of shares or special rights entitling to shares. The Board of Directors may issue either new shares or shares held by the Parent Company. The authorization includes the right for the Board of Directors to decide on all the terms and conditions of such share and special rights issuances, including to whom the shares and special rights may be issued. The authorization may be used to develop
the Parent Company’s capital structure, diversify the shareholder base, finance or carry out acquisitions or other arrangements, settle the Parent Company’s equity-based incentive plans, or for other purposes resolved by the Board of Directors. The authorization that would have been effective until June 30, 2016 was terminated by the resolution of the Annual General Meeting on June 17, 2014.
At the Annual General Meeting held on June 17, 2014 the shareholders authorized the Board of Directors to issue a maximum of 740 million shares through one or more issues of shares or special rights entitling to shares, including stock options. The Board of Directors may issue either new shares or shares held by the Parent Company. The authorization includes the right for the Board of Directors to resolve on all the terms and conditions of such share and special rights issuances, including issuance in deviation from the shareholders’ pre-emptive rights. The
authorization may be used to develop the Parent Company’s capital structure, diversify the shareholder base, finance or carry out acquisitions or other arrangements, settle the Parent Company’s equity-based incentive plans, or for other purposes resolved by the Board of Directors. The authorization is effective until December 17, 2015.
In 2014, Nokia Corporation issued 49 904 new shares following the holders of stock options issued in 2011 exercising their options.
On October 26, 2012 the Group issued a EUR 750 million convertible bond based on an authorization to issue shares and special rights entitling to shares, granted by the Annual General Meeting on May 6, 2010 and terminated by a resolution in the Annual General Meeting on May 7, 2013.
The bonds had a five-year maturity and a 5.0% per annum coupon payable semi-annually. The initial conversion price was EUR 2.6116, which
was adjusted to EUR 2.44 per share on June 18, 2014 due to the distribution of ordinary and special dividends as resolved by the Annual
General Meeting on June 17, 2014. Bond terms and conditions require conversion price adjustments folllowing dividend distributions. Consequently, the Board of Directors decided to issue 20 192 323 new shares on the conversion of the bonds into Nokia shares based on
the authorization by the Annual General Meeting and in deviation from the pre-emptive subscription right of the shareholders. Based on the adjusted conversion price of EUR 2.44, the maximum number of new shares which may be issued by the Group on the conversion of the bonds is 307.3 million shares, representing 8.4% of the Group’s total number of shares at December 31, 2014, excluding the shares owned by the Group. The right to convert the bonds into shares commenced on December 6, 2012 and ends on October 18, 2017. On March 15, 2013 EUR 0.1 million of the bond was converted into shares resulting in the issuance of 38 290 shares.
On September 23, 2013 the Group issued three EUR 500 million tranches of convertible bonds to Microsoft based on an authorization to issue shares and special rights entitling to shares granted by the Annual General Meeting on May 7, 2013 and terminated by a resolution in the Annual General Meeting on June 17, 2014. The maximum number of shares which might have been issued by the Group on conversion of these bonds, based on the initial conversion price of each tranche, was approximately 367.5 million. At the closing of the Sale of the D&S Business, these bonds were redeemed and the principal amount and accrued interest netted against the proceeds from the transaction.
At December 31, 2014 the Board of Directors had no other authorizations to issue shares, convertible bonds, warrants or stock options.
Other authorizations
At the Annual General Meeting held on May 7, 2013, the shareholders authorized the Board of Directors to repurchase a maximum of
370 million Nokia shares using funds in the unrestricted equity. The Group did not repurchase any shares on the basis of this authorization. The authorization that would have been effective until June 30, 2014 was terminated by the resolution of the Annual General Meeting on
June 17, 2014.
At the Annual General Meeting held on June 17, 2014 the shareholders authorized the Board of Directors to repurchase a maximum of 370 million Nokia shares. The amount corresponds to less than 10% of the total number of Nokia shares. The shares may be repurchased in order to develop the capital structure of the Parent Company and are expected to be cancelled. In addition, the shares may be repurchased
in order to finance or carry out acquisitions or other arrangements, to settle the Parent Company’s equity-based incentive plans, or to be transferred for other purposes. The authorization is effective until December 17, 2015. The Board of Directors decided on June 18, 2014 under
the authorization granted by the Annual General Meeting to commence share repurchases. The Board of Directors decided to repurchase a
maximum of 370 million shares, up to an equivalent of EUR 1.25 billion. At December 31, 2014 the Group had repurchased 66 903 682 shares.
On January 29, 2015 the Group announced that the Board of Directors had decided to cancel these treasury shares. The cancellation of the shares does not have an impact on the Parent Company’s share capital.
to authorize the Board of Directors to resolve to repurchase a maximum of 365 million Nokia shares. The proposed maximum number of shares that may be repurchased corresponds to fewer than 10% of the total number of Nokia shares. The shares may be repurchased in order to optimize the capital structure of the Parent Company and are expected to be cancelled. In addition, the shares may be repurchased in order to
finance or carry out acquisitions or other arrangements, to settle the Parent Company’s equity-based incentive plans, or to be transferred for other purposes. The shares may be repurchased either through a tender offer made to all shareholders on equal terms, or in another proportion than that of the current shareholders. The authorization is effective until November 5, 2016 and terminates the current authorization granted
by the Annual General Meeting on June 17, 2014.
The Group announced on January 29, 2015 that the Board of Directors will propose to the Annual General Meeting on May 5, 2015 that the shareholders authorize the Board of Directors to issue a maximum of 730 million shares through the issuance of shares or special rights entitling to shares in one or more issuances. The Board of Directors may issue either new shares or treasury shares held by the Parent Company. The Board of Directors proposes that the authorization may be used to develop the Parent Company’s capital structure, diversify the
shareholder base, finance or carry out acquisitions or other arrangements, settle the Parent Company’s equity-based incentive plans, or for
other purposes resolved by the Board of Directors. The proposed authorization includes the right for the Board of Directors to decide on all the terms and conditions of the issuance of shares and special rights entitling to shares, including issuance in deviation from the shareholders’
pre-emptive rights. The authorization would be effective until November 5, 2016 and terminate the current authorization granted by the
Annual General Meeting on June 17, 2014.
25. Share-based payment
The Group has several equity-based incentive programs for employees. The plans include performance share plans, restricted share plans,
employee share purchase plans, and stock option plans. Both executives and employees participate in these programs. In 2011 to 2013 of
the years presented, Nokia global equity-based incentive programs have been offered to the employees of Devices & Services, Group Common Functions, HERE and Nokia Technologies. In 2014, the employees of Nokia Networks were included in the equity grants following the changes in the Group. The equity-based incentive grants are generally conditional on continued employment as well as fulfillment of the performance, service and other conditions determined in the relevant plan rules. The share-based payment expense for all equity-based incentive grants for
continuing operations amounts to EUR 65 million (EUR 42 million in 2013 and EUR 11 million in 2012). The share-based payment expense for all
equity-based incentive grants related to discontinued operations was EUR 8 million for 2014 (EUR 15 million in 2013 and EUR 1 million in 2012).
Performance shares
In 2014, the Group administered four global performance share plans, the Performance Share Plans of 2011, 2012, 2013 and 2014. The performance shares represent a commitment by the Group to deliver Nokia shares to employees at a future point in time, subject to the
fulfillment of predetermined performance criteria.
In the Performance Share Plan 2014 Plan, performance shares were granted under two sets of performance criteria defined specifically for
the separate business units and a minimum payout amount guarantee was introduced. The number of performance shares at threshold is the amount of performance shares granted to an individual that will be settled if the threshold performance with respect to the performance criteria is achieved. As a result of the minimum payout amount introduced in the 2014 plan, at the end of the performance period the number of shares to be settled following the restriction period will start at a minimum of 50% of the amount at threshold. Any additional payout beyond
the minimum amount will be determined based on the financial performance against the established performance criteria during the two-year
performance period. At maximum performance, the settlement amounts to four times the amount at threshold. Global performance share plans at December 31, 2014 are:
Plan outstanding at thresholdPerformance shares Confirmed payout (% of threshold) Performance period Restriction period Settlement year
2011 – 0%, no settlement 2011-2013 N/A 2014
2012 – 0%, no settlement 2012-2013 2014 2015
2013 1 822 432 173% 2013-2014 2015 2016
2014 6 794 601 2014-2015 2016 2017
The 2013 Plan performance criteria were modified in 2014 to align performance measures to the continuing operations following the Sale of the D&S Business. The payout factor based on the modified performance criteria for the 2013 plan is 173% of the amount outstanding
Notes to consolidated financial statements continued
Performance criteria for the year ended December 31, 2014:
Performance criteria for 2014 plan Threshold performance Maximum performance Weight
Nokia Group employees
(excluding HERE) Average annual non-IFRS(1) net sales (Nokia Group) EURm 11 135 EURm 15 065 50% Average annual diluted non-IFRS(1) EPS (Nokia Group) EUR 0.11 EUR 0.38 50%
HERE employees Average annual non-IFRS(1) net sales (HERE) EURm 950 EURm 1 150 50%
Average annual non-IFRS(1) operating profit (HERE) EURm 0 EURm 130 25% Average annual diluted non-IFRS(1) EPS (Nokia Group) EUR 0.11 EUR 0.38 25% (1) Non-IFRS measures exclude all material special items for all periods. In addition, non-IFRS results exclude intangible asset amortization and other purchase price accounting-related items arising from
business acquisitions.
Until the shares are delivered, the participants do not have any shareholder rights, such as voting or dividend rights, associated with the performance shares. The performance share grants are generally forfeited if the employment relationship with the Group terminates prior to vesting. Unvested performance shares for employees who have transferred to Microsoft following the Sale of the D&S Business have been forfeited.
Restricted shares
In 2014, the Group administered four global restricted share plans, the Restricted Share Plan 2011, 2012, 2013 and 2014. From 2014, restricted shares have been granted on a more selective basis than in previous years: only for exceptional retention and recruitment purposes to ensure the Group is able to retain and recruit talent critical to its future success. All of the Group’s restricted share plans have a restriction period of three years after grant. Until the shares are delivered, the participants do not have any shareholder rights, such as voting or dividend rights, associated with the restricted shares. The restricted share grants are generally forfeited if the employment relationship with the Group terminates prior to vesting. Unvested restricted shares for employees who have transferred to Microsoft following the Sale of the D&S Business have been forfeited.
Active share-based payment plans by instrument
Performance shares outstanding at threshold(1) Restricted shares outstanding(1)
Performance shares
at threshold Weighted average grant date fair value EUR(2)
Restricted
shares outstanding Weighted average grant date fair value EUR(2) At January 1, 2012 7 582 534 16 586 091 Granted 5 785 875 1.33 12 999 131 1.76 Forfeited (2 718 208) (4 580 182) Vested (2 076 116) (1 324 508) At December 31, 2012 8 574 085 23 680 532 Granted 6 696 241 2.96 12 347 931 3.05 Forfeited (1 512 710) (3 490 913) Vested (2 767 412) (2 180 700) At December 31, 2013 10 990 204 30 356 850 Granted 6 967 365 6.07 1 013 466 5.62 Forfeited (9 338 036) (19 546 605) Vested (2 500) (4 228 306) At December 31, 2014(3) 8 617 033 7 595 405
(1) Includes performance and restricted shares granted under other than global equity plans.
(2) The fair values of performance and restricted shares are estimated based on the grant date market price of the Nokia share less the present value of dividends expected to be paid during the
vesting period.
(3) Includes 249 943 restricted shares granted in the fourth quarter of 2011 under Restricted Share Plan 2011 that vested on January 1, 2015.
Employee share purchase plan
In 2014 and 2013, the Group offered a voluntary Employee Share Purchase Plan to employees working for the Devices & Services business,
HERE, Nokia Technologies and Group Common Functions. Under the 2014 plan, employees make contributions from their salary to purchase Nokia shares on a monthly basis during a 12-month savings period. One matching share is issued for every two purchased shares the employee still holds after the last monthly purchase has been made in June 2015. In 2014,133 341 matching shares were issued as settlement to the participants of the Employee Share Purchase Plan 2013. Employees participating in the 2013 Plan who have transferred to Microsoft following the Sale of the D&S Business have received a cash settlement in 2014 for their accrued share purchases under the 2013 Plan.
In 2014, the Group administered two global stock option plans, the Stock Option Plans 2007 and 2011, approved by the shareholders at the Annual General Meeting in the year when the plan was launched. In 2014, the Board of Directors decided not to propose adoption of a stock
option plan to the Annual General Meeting and no new grants were offered.
Each stock option entitles the holder to subscribe for one new Nokia share. The stock options are not transferable and may be exercised for
shares only. Shares will be eligible for dividends for the financial year in which the share subscription takes place. Other shareholder rights will
commence on the date on which the subscribed shares are entered in the Trade Register. The stock option grants are generally forfeited if the employment relationship with the Group is terminated. Unvested stock options for employees who have transferred to Microsoft following the Sale of the D&S Business have been forfeited.
The reconciliation of stock options outstanding and exercisable is as follows:
Shares under option(1) of sharesNumber
Weighted average exercise price EUR Weighted average share price EUR Weighted average grant date fair value EUR(2) Number of options exercisable Weighted average exercise price EUR At January 1, 2012 23 390 030 9.07 6 904 331 14.01 Granted 10 258 400 2.32 0.76 Exercised (627) 0.97 2.08 Forfeited (4 246 222) 6.60 Expired (3 555 213) 15.26 At December 31, 2012 25 846 368 5.95 5 616 112 11.96 Granted 8 334 200 2.77 1.23 Forfeited (3 705 512) 4.06 Expired (2 474 864) 14.78 At December 31, 2013 28 000 192 4.47 4 339 341 9.66 Exercised (56 623) 5.75 6.69 Forfeited (16 839 593) 3.39 Expired (3 759 953) 9.94 At December 31, 2014 7 344 023 4.81 1 913 537 10.43
(1) Includes stock options granted under other than global equity plans, excluding the Nokia Networks equity incentive plan.
(2) Fair value of stock options is calculated using the Black-Scholes model.
Nokia Networks Equity Incentive Plan
Nokia Networks established the Nokia Networks Equity Incentive Plan (“the Plan”), a share-based incentive program in 2012 under which options
for Nokia Solutions and Networks B.V. shares were granted to selected key employees and Nokia Networks’ senior management, some of whom
became members of the Nokia Group Leadership Team in 2014. Following the Group’s acquisition of Siemens’ stake in Nokia Networks and the Sale of the D&S Business, the Board of Directors approved a modification to the Plan on February 14, 2014 to allow 30% of the options to vest
on the third anniversary of the grant date, with the remainder of the options continuing to become exercisable on the fourth anniversary of the
grant date, or earlier, in the event of a corporate transaction as defined in the Plan. The exercise price of the options is based on a per share
value on grant as determined for the purposes of the Plan. The options are accounted for as a cash-settled share-based payment liability based on the circumstances at December 31, 2014. The fair value of the liability is determined based on the estimated fair value of shares less the exercise price of the options on the reporting date. The total carrying amount of the Plan is EUR 80 million (EUR 41 million in 2013) and is