Nokia Board of Directors approves the Nokia Equity Program for 2018 and the issuance of shares held by the company

Nokia Corporation

Stock Exchange Release

February 1, 2018 at 8:15 (CET +1)

Nokia Board of Directors approves the Nokia Equity Program for 2018 and the issuance of shares held by the company

Espoo, Finland - Nokia announced today that its Board of Directors has approved the companys equity program for 2018 (the Nokia Equity Program 2018) designed to support and align the participants focus with Nokias strategy and long-term success. In line with previous years, the Nokia Equity Program 2018 includes the following equity instruments:

An employee share purchase plan (the Employee Share Purchase Plan), entitling the eligible employees to contribute a part of their salary to purchase Nokia shares. After a 12-month holding period, Nokia will offer the employees one matching share for every two purchased shares held by an employee at the end of the holding period;

Performance shares, which are dependent on the achievement of independent performance criteria (Performance Shares); and

Restricted shares, which are used on a limited basis in retention and recruitment circumstances (Restricted Shares).

Since 2014, stock options have no longer been part of the Nokia equity programs.

Employee Share Purchase Plan

Under the Employee Share Purchase Plan, the eligible Nokia Group employees may elect to make contributions from their monthly net salary to purchase Nokia shares. The 2018 Employee Share Purchase Plan is planned to be offered to Nokia employees in up to 76 countries, provided that there are no local regulatory or administrative restraints in relation to such plan. Participation in the plan is voluntary.

The monthly minimum and maximum contribution limit to the plan is EUR 15 and EUR 150, respectively. Consequently, the maximum participant contribution limit during the plan cycle is EUR 1 800. Generally, the share purchases will be made at market value on pre-determined dates on a quarterly basis during a 12-month period. Nokia intends to deliver one matching share for every two purchased shares that the participant still holds on July 31, 2019, which marks the end of the Employee Share Purchase Plan cycle for 2018.

The aggregate maximum amount of contributions that employees can make during the enrolment window for the plan cycle commencing in 2018 will be approximately EUR 60 million, which equals approximately 15.5 million Nokia shares using the closing share price of EUR 3.88 on Nasdaq Helsinki on January 31, 2018. Accordingly, based on the matching ratio of one matching share for every two purchased shares, the number of matching shares would be approximately 7.75 million.

Performance Shares

Nokia uses Performance Shares as the main long-term incentive instrument for executives and other eligible employees with the intention to effectively contribute to the long-term value creation and sustainability of the company and to align interests of the employees with those of Nokias shareholders. Performance Shares are also designed to ensure that the overall equity-based compensation is based on performance in addition to supporting the recruitment and ensuring retention of vital talent for the future success of Nokia.

Under the 2018 Performance Share plan, the pay-out will depend on whether independent performance criteria have been met by the end of the performance period. The performance criteria are Nokia annual earnings per share (non-IFRS, diluted), annual free cash flow (non-IFRS) and revenue (non-IFRS).

The 2018 Performance Share plan has a two-year performance period (2018-2019) and a subsequent one-year restriction period. The number of Performance Shares to be settled would be determined by reference to the performance targets during the performance period. For non-executive participants, 25 per cent of the Performance Shares granted in 2018 will settle after the restriction period, regardless of the satisfaction of the applicable performance criteria. In case the applicable performance criteria are not satisfied, employees who are executives at the date of Performance Share grant in 2018 will not receive any settlement.

The grant under the 2018 Performance Share plan could result in an aggregate maximum settlement of 94 million Nokia shares, in the event that maximum performance against all the performance criteria is achieved.

Restricted Shares

Restricted Shares are granted to Nokias executives and other eligible employees on a more limited basis than Performance Shares for purposes related to retention and recruitment to ensure Nokia is able to retain and recruit vital talent for the future success of the company.

Under the 2018 Restricted Share plan, the Restricted Shares 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 under the 2018 Restricted Share plan could result in an aggregate maximum settlement of 8 million Nokia shares.

Dilution effect

As of December 31, 2017, the aggregate maximum number of shares that could be issued under Nokias outstanding equity programs and stock option rights, assuming the Performance Shares would be delivered at maximum level, represented approximately 2.32 per cent of Nokias total number of shares (excluding the shares owned by Nokia Corporation). The potential maximum number of shares that could be issued under the Equity Program 2018 represents approximately an additional 1.96 percentage points, 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.

Share issuance resolution for the settlement of shares under various Nokia equity plans

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