Nokia reveal’s Stephen Elop’s 2012 Salary. Base salary up but no bonuses, effectively half of 2011 salary

In Nokia’s financial report yesterday, Nokia revealed CEO Stephen Elop’s salary.

Whilst the base salary increased 60k Euros to 1.08M Euros, he did not earn a bonus for 2012. Compared to 2011, Elop has received a compensation ‘pay-cut’ from 7.94M Euros to 4.33M Euros. Not sure if this included any one time payments.

From the 20-F Nokia document:

Stephen Elop’s service contract covers his position as President and CEO as from September 21, 2010. As at December 31, 2012, Mr. Elop’s annual base salary, which is subject to an annual review by the Board of Directors and confirmation by the independent members of the Board, is EUR 1 102 500. His incentive target under the Nokia short-term cash incentive plan is 100% of annual base salary as at December 31, 2012. In addition, Mr. Elop had a separate plan for 2011-2012, approved by the Board of Directors. Description and outcome of this plan is below. Mr. Elop is entitled to the customary benefits in line with our policies applicable to the top management, however, some of them are being provided on a tax-assisted basis. Mr. Elop is also eligible to participate in Nokia’s long-term equity-based compensation programs according to Nokia policies and guidelines and as determined by the Board of Directors.

In case of termination by Nokia for reasons other than cause, Mr. Elop is entitled to a severance payment of up to 18 months of compensation (both annual base salary and target incentive) and his equity will be forfeited as determined in the applicable equity plan rules, with the exception of the equity out of the Nokia Equity Program 2010, which will vest in an accelerated manner (the performance period of Nokia Performance Share Plan 2010 ended in 2012 and no shares were delivered in accordance with its terms). In case of termination by Mr. Elop, the notice period is six months and he is entitled to a payment for such notice period (both annual base salary and target incentive for six months) and all his equity will be forfeited. In the event of a change of control of Nokia, Mr. Elop may terminate his employment upon a material reduction of his duties and responsibilities, upon which he will be entitled to a compensation of 18 months (both annual base salary and target incentive), and his unvested equity will vest in an accelerated manner. In case of termination by Nokia for cause, Mr. Elop is entitled to no additional compensation and all his equity will be forfeited. In case of termination by Mr. Elop for cause, he is entitled to a severance payment equivalent to 18 months of notice (both annual base salary and target incentive), and his unvested equity will vest in an accelerated manner. Mr. Elop is subject to a 12-month non-competition obligation after termination of the contract. Unless the contract is terminated by Nokia for cause, Mr. Elop may be entitled to compensation during the non-competition period or a part of it. Such compensation amounts to the annual base salary and target incentive for the respective period during which no severance payment is paid.

The Board of Directors decided in March 2011 that in order to align Mr. Elop’s compensation to increased shareholder value and to link a meaningful portion of his compensation directly to the performance of Nokia’s share price over the period of 2011-2012, his compensation structure for 2011 and 2012 would be modified. To participate in this program, Mr. Elop invested a portion of his short-term cash incentive opportunity and a portion of the value of his expected annual equity grants into the program as follows:

In consideration, Mr. Elop had the opportunity to earn a number of Nokia shares at the end of 2012 based on two independent criteria, with half of the opportunity tied to each criterion:

Nokia share price under both criteria was calculated as a 20-day trade volume weighted average share price on the NASDAQ OMX Helsinki. If the minimum level for one of the criterion had been met, a total of 125 000 Nokia ordinary shares would have been delivered to Mr. Elop. At maximum level for both criteria, a total of 750 000 Nokia ordinary shares would have been delivered to him. Shares earned under this plan during 2011-2012 would have been subject to an additional one-year vesting period until the first quarter 2014, at which point the earned and vested shares would have been delivered to Mr. Elop.

Based on the results, as of December 31, 2012, no share delivery will take place as the minimum performance for neither of the two performance criteria was reached. The number of shares earned and to be settled may be adjusted by the Board of Directors under certain exceptional circumstances up until June 30, 2013 should the results significantly change.

For information about the compensation and benefits received by Mr. Elop during 2012, see Item 6B. “Compensation—Executive Compensation—Summary Compensation Table 2012” and “Compensation—Executive Compensation—Equity Grants in 2012.”

Source: Nokia via YLE

Category: Nokia