|NOKIA CORP filed this Form 6-K on 09/19/2013|
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Employment Agreements and Change of Control Agreements
Service Contract With Stephen Elop
We entered into an amendment with Mr. Elop to his service contract, which became effective on the date of the Purchase Agreement. Under the terms of the amendment, Mr. Elop resigned from our Board of Directors and from his positions of President and Chief Executive Officer as of the date following the date of the Purchase Agreement, September 3, 2013. Mr. Elop will serve as Executive Vice President of Devices & Services until the Closing, after which it is anticipated that he will become employed with Microsoft pursuant to the terms of an employment agreement with Microsoft.
Under the amendment to his service contract, Mr. Elop agreed that the change in his position (described above) would not entitle him to terminate his service contract for cause under the terms of his service contract, which provide for payment of 18 months of his base salary and management short-term cash incentive (calculated at 100% of target) as well as accelerated vesting of his outstanding equity awards upon such a termination by Mr. Elop for cause. Under Mr. Elops original agreement, if Mr. Elops service contract was terminated without cause, or he resigned as a result of a significant reduction in his duties and responsibilities, in either case within 12 months following a change of control, he would be entitled to receive 18 months of his base salary and management short-term cash incentive (calculated at 100% of target) as well as accelerated vesting of his outstanding equity awards. Under his original agreement, Mr. Elop would be entitled to these same benefits if he terminated his employment for cause at any time regardless of a change of control, but would be entitled only to the same cash severance benefit (but not the acceleration of all equity awards) if his service contract was terminated by Nokia without cause prior to a change of control. However, under the change of control provisions of Mr. Elops agreement as amended, Mr. Elop may terminate his employment on or following the Closing (and assuming he has not materially breached his service contract prior to such termination) or Nokia may terminate his employment without cause prior to the Closing, and in either such case, Mr. Elop will be entitled to receive 18 months of his base salary and management short-term cash incentive (calculated at 100% of target) as well as accelerated vesting of his outstanding equity awards.
Although the actual amount of these termination payments and the value of equity acceleration will not be determined until such termination occurs, using compensation values and the Nokia closing share price of EUR 4.12 per share on September 6, 2013, and an assumed Closing Date of in the first quarter of 2014, such pro forma amounts are estimated to be approximately EUR 18.8 million in the aggregate. This amount includes: base salary and management incentive EUR 4.1 million, value of benefits EUR 0.1 million and pro forma value of equity awards EUR 14.6 million. Once the actual amount is determined, pursuant to the terms of the Purchase Agreement, 30% of the amount (EUR 5.65 million) will be borne by Nokia and the remaining 70% of the amount (EUR 13.17 million) will be borne by Microsoft pursuant to the purchase price adjustment mechanism described in The Purchase AgreementPurchase Price Adjustments beginning on page 41. Mr. Elop is subject to a covenant restricting him from working for certain specified competitors of Nokia, provided that upon Mr. Elops commencement of employment with Microsoft, Nokia will waive his competition restriction as to Microsoft.
Compensation Paid to Risto Siilasmaa
Risto Siilasmaa will continue as Nokias Chairman of the Board, and as a result of the signing of the Purchase Agreement relating to the anticipated Sale of the D&S Business, has assumed additional responsibilities as interim CEO, effective September 3, 2013. As compensation for his additional responsibilities as interim CEO, he will receive EUR 500,000. In order to reinforce the alignment of his interests with those of shareholders, 40% of this amount will be delivered to him in shares bought on the open market. The remaining 60% will be paid in cash, most of which is used to cover the estimated associated taxes.
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