Ad-hoc | 22 January 2004 15:30

Nokia Introduces a New Equity Program for 2004

Ad-hoc-announcement processed and transmitted by DGAP. The issuer is solely responsible for the content of this announcement. ——————————————————————————– Nokia Introduces a New Equity Program for 2004: January 22, 2004 – Increased Performance Orientation Through a Broad-Based Performance Shares Program – Significant Reduction in Number of Stock Options Nokia will introduce Performance Shares as the main element to its broad-based equity compensation program to further emphasize the performance element in employees’ long-term incentives. As part of this change, the number of stock options to be granted will be significantly reduced as compared to 2003. The target group for this new share-based incentive program continues to be broad and to include a wide number of employees on many levels of the organization. However, the number of actual participants will be smaller as the program increases the focus on rewarding achievement and on retaining high potential and critical employees. The use of performance shares and stock options will build a more optimal and well-balanced combination of share-based compensation elements for Nokia’s reward model. The new, more diversified program aligns the potential value received by participants directly with the performance of the company. No performance shares will vest unless the company performance reaches at least one of the threshold levels measured by two independent, pre-defined performance criteria: the company’s Average Annual Net Sales Growth and EPS Growth (basic, reported) for 2004 to 2007. If required performance levels are achieved, the first payout will take place in 2006. The second and final payout, if applicable, will be in 2008. Under the 2004 Program, approved by the Nokia Board of Directors, the maximum performance level for both criteria will result in the vesting of the maximum of 17 million Performance Shares. If the threshold levels of performance are not achieved, none of the performance shares will vest. For performance between the threshold and maximum performance levels the payout follows a linear scale. Under the 2004 Program, Nokia will issue significantly fewer stock options for incentive purposes than in 2003 when approximately 30 million options were granted under the Stock Option Program out of the maximum 94.6 million as approved by the Annual General Meeting the same year. In 2004, the maximum number of Stock Options to be granted is 7 million. In addition, Nokia has used restricted shares on a very limited scale to retain high potential and critical employees. Going forward, the company will continue to use a limited number of Restricted Shares to recruit, retain, reward and motivate selected high potential and critical employees. In 2004, the maximum number of Restricted Shares to be granted is 2 million. end of ad-hoc-announcement (c)DGAP 22.01.2004 Issuer’s information/explanatory remarks concerning this ad-hoc-announcement: For more information – Media and Investor Contacts: Corporate Communications, tel. +358 7180 34495 or +358 7180 34900 Investor Relations Europe, tel. +358 7180 34289 Investor Relations US, tel. +1 972 894 4880 http://www.nokia.com The complete press release is available at http://press.nokia.com/PR/200401/931569_5.html ——————————————- Additional Information about the Nokia 2004 Performance Share Program Criteria Performance Shares represent a commitment by the company to deliver Nokia shares to employees at a future point in time subject to the company’s fulfillment of pre-defined performance criteria. Performance shares will vest subject to the company performance reaching at least one of the threshold levels measured by two independent, pre-defined performance criteria: the company’s Average Annual Net Sales Growth and EPS Growth (basic, reported) for the 2004 to 2007 period. Both the EPS and Average Annual Net Sales Growth criteria will have an equal weight of 50%. The initial threshold for the Average Annual Net Sales Growth criteria is 4% resulting in the vesting of up to 2 million Performance Shares. Similarly, the first threshold for the annual EPS Growth criteria is 3% resulting in the vesting of up to 2 million Performance Shares. The maximum performance for Average Annual Net Sales Growth criteria is 16% resulting in the vesting of up to 8.5 million Performance Shares. Similarly, the maximum performance for the annual EPS Growth criteria is 12% resulting in the vesting of up to 8.5 million Performance Shares. Performance exceeding the maximum criteria does not increase the number of shares vesting. Under the 2004 Program, the maximum performance level for both criteria will result in the vesting of the maximum of 17 million Performance Shares. For performance between the threshold and maximum performance levels the payout follows a linear scale. The company will determine the method by which the shares are obtained for delivery after vesting, which may also include cash settlement. As of December 31, 2003, the total dilution effect of Nokia’s stock options currently outstanding, assuming full dilution, is approximately 5% and the potential maximum effect of the new program would be approximately 0.6%. ——————————————————————————– WKN: 870737; ISIN: FI0009000681; Index: Listed: Amtlicher Markt in Frankfurt (General Standard); Freiverkehr in Berlin- Bremen, Düsseldorf, Hamburg, Hannover, München und Stuttgart 221530 Jän 04