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As filed with the Securities and Exchange Commission on March 4, 2021

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2020

Commission file number 1-13202

Nokia Corporation

(Exact name of Registrant as specified in its charter)

Republic of Finland
(Jurisdiction of incorporation)

Karakaari 7 FI-02610 Espoo, Finland
(Address of principal executive offices)

Esa Niinimäki, Deputy Chief Legal Officer, Corporate, Telephone: +358 (0) 10 44 88 000, Facsimile: +358 (0) 10 44 81 002,
Karakaari 7, FI-02610 Espoo, Finland
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934 (the “Exchange Act”):

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(1)   Not for trading, but only in connection with the registration of American Depositary Shares representing these shares, pursuant to the requirements of the Securities and Exchange Commission.

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Securities registered pursuant to Section 12(g) of the Exchange Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Exchange Act: None
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Indicate the number of outstanding shares of each of the registrant’s classes of capital or common stock as of the close of the period covered by the annual report. Shares: 5 653 886 159.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting
company” or “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP ◻

International Financial Reporting Standards as issued by the International Accounting Standards Board ⌧

Other ◻

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Cross-reference table to Form 20-F

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Forward-looking statements

Certain statements contained in this Annual Report constitute "forward-looking statements". Forward-looking statements provide Nokia's current expectations of future events based on certain assumptions and include any statement that does not directly relate to any current or historical fact. The words “believe”, “expect”, “expectations”, “anticipate”, “foresee”, “see”, “target”, “estimate”, “designed”, “aim”, “plan”, “intend”, “influence”, “assumption”, “focus”, “continue”, “project”, “should", "is to", "will”, "strive", "may" or similar expressions as they relate to us or our management are intended to identify these forward-looking statements, as well as statements regarding:

These statements are based on management’s best assumptions and beliefs in light of the information currently available to it and are subject to a number of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from such statements. These statements are only predictions based upon our current expectations and views of future events and developments and are subject to risks and uncertainties that are difficult to predict because they relate to events and depend on circumstances that will occur in the future. Risks and uncertainties that could affect these statements include but are not limited to the risk factors specified under “Operating and financial review and prospects-Risk factors” of this Annual Report on Form 20-F and in our other filings or documents furnished with the U.S. Securities and Exchange Commission. Other unknown or unpredictable factors or underlying assumptions subsequently proven to be incorrect could cause actual results to differ materially from those in the forward-looking statements. We do not undertake any obligation to publicly update or revise forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required.

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Introduction and use of certain terms

Nokia Corporation is a public limited liability company incorporated under the laws of the Republic of Finland. In this Annual Report on Form 20-F, any reference to “we”, “us”, “the Group”, “the company” or “Nokia” means Nokia Corporation and its consolidated subsidiaries and generally Nokia’s continuing operations, except where we separately specify that the term means Nokia Corporation or a particular subsidiary or business segment only or our discontinued operations. References to “our shares” matters relating to our shares or matters of corporate governance refer to the shares and corporate governance of Nokia Corporation.

Nokia Corporation has published its consolidated financial statements in euro for periods beginning on or after January 1, 1999. In this Annual Report on Form 20-F, references to “EUR”, “euro” or “€” are to the common currency of the European Economic and Monetary Union, references to “dollars”, “US dollars”, “USD” or “$” are to the currency of the United States, and references to “Chinese yuan” or “Chinese yuan renminbi” or “CNY” are to the official currency of the People’s Republic of China. Solely for the convenience of the reader, this Annual Report on Form 20-F contains conversions of selected euro amounts into US dollars at specified rates or, if not so specified, at the year-end rate of 1.2271 US dollars per euro, and conversions of selected euro amounts into Chinese yuan renminbi at specified rates or, if not specified, at the year-end rate 8.0225 Chinese yuan renminbi per euro. The referred year-end rates were the European Central Bank reference rates on December 31, 2020. No representation is made that the amounts have been, could have been or could be converted into US dollars or Chinese yuan at the rates indicated or at any other rates.

Additional terms are defined in the "Glossary".

The information contained in, or accessible through, the websites linked throughout this annual report on Form 20-F is not incorporated by reference into this document and should not be considered a part of this document.

Nokia Corporation furnishes Citibank, N.A., as Depositary, with its consolidated financial statements and a related audit opinion of our independent auditors annually. These financial statements are prepared on the basis of International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board and in conformity with IFRS as adopted by the European Union. In accordance with the rules and regulations of the SEC, we do not provide a reconciliation of net income and shareholders’ equity in our consolidated financial statements to the generally accepted accounting principles in the United States, or US GAAP. We also furnish the Depositary with quarterly reports containing unaudited financial information prepared on the basis of IFRS, as well as all notices of shareholders’ meetings and other reports and communications that are made available generally to our shareholders. The Depositary makes these notices, reports and communications available for inspection by record holders of American Depositary Receipts (ADRs), evidencing American Depositary Shares (ADSs), and distributes to all record holders of ADRs notices of shareholders’ meetings received by the Depositary.

In addition to the materials delivered to holders of ADRs by the Depositary, holders can access our consolidated financial statements, and other information included in our annual reports and proxy materials, at nokia.com/financials. This annual report on Form 20-F is also available at nokia.com/financials as well as on Citibank’s website at https://app.irdirect.net/company/49733/hotline/⁽¹⁾. Holders may also request a hard copy of this annual report by calling the toll-free number 1-877-NOKIA-ADR (1-877-665-4223), or by directing a written request to Citibank, N.A., Shareholder Services, PO Box 43077, Providence, RI 02940-3081, United States. With each annual distribution of our proxy materials, we offer our record holders of ADRs the option of receiving all of these documents electronically in the future.

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Key highlights

Humanity, connected

The world has made it through a uniquely difficult year.

We lived, learned, worked and socialized online. It was a vast change, which happened quickly and without warning. Our customers were put under immense pressure. But with our help, they delivered.

This reminds us that connectivity is not a ‘nice to have’. It is a fundamental part of modern society, one that Nokia has a responsibility to provide.

And we are doing so. In 2020 our products and services underpinned new innovations in efficient public services, remote education, optimized logistics, smart healthcare, digital startups, clean energy generation, waste-free manufacturing and traditional networking, among many other uses. We carried out this work with a permanent focus on security, value and performance.

This is the connectivity that the world deserves. We will continue to deliver it.

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Letter from our President and CEO

This was a challenging year for everyone. Our networks were put to the test by a global crisis and they not only survived but thrived, showing that a new way of doing business is possible. 2020 showed the true value of technology and increased the need to find smart solutions to global problems, from climate change to stalling productivity.

Change and continuity

This was a year of unprecedented change, but also one in which we saw the importance of our technology. Fixed and mobile networks kept the global economy and critical infrastructure running even as the COVID-19 pandemic led to nationwide shutdowns across the world.

I was proud of the role we played in enabling emergency services, food suppliers, and public health agencies to stay connected throughout a global crisis. Kitchens became classrooms and boardrooms operated from bedrooms as millions of people turned to bandwidth-intensive video conferencing and streaming applications. This contributed to a year’s worth of traffic growth in a matter of days, but we were able to support our CSP customers in handling the huge upsurge even as global supply chains were disrupted and lockdowns made accessing sites difficult.

The ability of our employees to adapt at speed and come up with creative solutions was our greatest asset this year and proved the resilience and reliability that Nokia is renowned for.

2020 was the year businesses realized that the old adage of “things must change to remain the same” has never been more true. Companies that had done the most to modernize their operations were those best equipped to deal with the disruption. The pandemic accelerated the need for widespread digitalization and automation, leading to the increasing importance of critical networks – networks that combine flexibility with carrier-grade performance.

We launched a strategic analysis into these industry trends, which found that value would increasingly move away from monolithic systems towards software, silicon and services with the importance of virtualization, cloud-native architecture, and open interfaces becoming ever greater. It was clear to us that to support our customers through these changes and to better position Nokia for new opportunities we would also need to change.

Development in an extraordinary year

Overall in 2020, we saw improvement both in our gross margin and operating margin performance up by 2.1 percentage points and 1.9 percentage points year-on-year respectively. This development was supported by a regional mix shift towards the higher-margin North America region, our ongoing R&D efforts to enhance product quality and cost competitiveness, and improvements in our Networks business.

Nokia delivered a strong cash performance for the year and we ended 2020 with net cash and current financial investments at approximately EUR 2.5 billion, up approximately EUR 0.8 billion from 2019. Net sales decreased by 6% year-on-year primarily due to network deployment and planning services within Mobile Access. In Nokia Enterprise, we continued to make great progress in 2020 and delivered double digit year-on-year growth in net sales.

Overall, we took important steps in improving on execution. I was particularly pleased to see the clear financial improvement in Mobile Access, reflecting our ongoing efforts to strengthen the competitiveness and cost position of our mobile radio products. In 2020, we saw growth in radio access products and the 5G gross margin increase due to product cost reduction, partly helped by higher ReefShark shipment volumes. Our aim was to be above 35% for our KPI on shipments of our 5G Powered by ReefShark product portfolio; we ended the year at 43% and we remain on track to realize 70% by the end of 2021. Our progress was validated by our customers. We ended the year with 188 commercial 5G agreements and 44 live 5G networks.

We strengthened our technology leadership in many key areas of our business: together with Elisa and Qualcomm, we achieved the worldwide 5G speed record. We brought AI to the network edge allowing CSPs to deliver improved customer experience, fix customer issues instantly and increase upload and download speeds.

We also launched the world’s first automated 4G/5G network slicing technology for mobile core and transport networks and a service to bring down network energy usage. We continued to lead the passive optical network evolution and launched the world’s first 25G PON broadband solution to enhance CSPs’ fiber network usage.

We continued to lead in private wireless networks ending 2020 with 260 customers. For the second year in a row Analysys Mason ranked Nokia as the #1 telecoms software provider by market share for telecoms software and services combined. And we filed more than 1 500 new inventions with more than 3 500 patent families now declared as essential for 5G.

This was a year that gave added impetus to addressing the digital divide. We continued to work with our customers to connect the unconnected, with 6.6 billion subscriptions on our customer’s radio networks worldwide by the end of 2020. For instance, Nokia’s community investment programs helped bring fixed wireless access to more than 1 000 children in Kenya this year. We also remained on track to achieve our long-term science-based target of reducing emissions from our products. In 2020, the customer base station sites we modernized used 54% less energy on average. And we made progress in strengthening human rights protections by increasing training for our suppliers on preventing modern slavery and respecting minority rights. We also maintained our focus on ethical business training, which 96% of our employees completed. In addition, 85% of our leaders completed training on navigating bias and building a more inclusive workplace.

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New operating model

At the end of October we announced that we would move to a new operating model from the beginning of 2021. As I told our employees, this was not change for change’s sake, with an incoming CEO looking to make his mark on an organization. But rather to improve the way we work so we can better align with how customers want to buy and achieve our aim of technology leadership in the areas where we choose to compete. The new structure will simplify and streamline the way we work enabling us to improve cost efficiency and become faster, more agile, more accountable, and more transparent as an organization.

Our four new business groups each have a clear mission and have been empowered with the resources and accountability to achieve their goals. In brief, they are as follows:

Looking ahead

This was a challenging year for everyone. Our networks were put to the test by a global crisis and they not only survived but thrived, showing that a new way of doing business is possible. 2020 showed the true value of technology and increased the need to find smart solutions to global problems, from climate change to stalling productivity.

Nokia will help enable those solutions by building the critical networks that the world will come to rely on, positioning ourselves for technology leadership and a path to sustainable financial performance.

We know we have our work cut out for us. We expect 2021 to be challenging with meaningful headwinds primarily due to market share loss and price erosion in North America. It will be a time of transition as we adapt to a new structure and finalize our strategy, but by doing so our employees will be empowered to act faster enabling us to accelerate our immediate and long-term plans. We will stay focused on securing technology leadership in the segments where we compete, especially in 5G; continue to strengthen existing customer relationships; and make sure we seize new opportunities in areas where we see a path to value creation.

I would like to thank our employees for their tremendous efforts and commitment this year as well as the warm welcome they have given me.

I would also like to pay tribute to my predecessor, Rajeev Suri, who led Nokia over the past six years and through the first half of 2020. My return to Nokia as President and CEO is both an incredible personal honor and also the next stage of continual evolution for this great company.

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Pekka Lundmark

President and CEO

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Our strategy

Our “Rebalancing for growth” strategy was launched at the end of 2016 and updated in 2019. It was based on 5 pillars: Lead, Grow, Strengthen, Diversify, and Operational Excellence.

With our “Rebalancing for Growth” strategy, we addressed both our primary CSP market and new growth opportunities. The strategy built on our core strength of delivering large high-performance networks by expanding our business into targeted, higher-growth and higher-margin vertical markets.

On October 29, 2020, Nokia announced the start of a strategic review, to culminate in a renewed strategy to be announced at Capital Markets Day on March 18, 2021.

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1.Lead

Lead in high-performance, end-to-end networks with communication service providers.

In the first pillar of our strategy – leading in high-performance, end-to-end networks with communication service providers – we continued to progress in 5G despite challenges in Mobile Access. By the end of 2020, we reached 139 commercial 5G deals and launched 44 live networks with our customers and we achieved our 2020 target for 4G plus 5G market share, excluding China, to end 2020 at approximately 28%.

Focus areas and progress

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2.Grow

Grow our position in the enterprise market and enable Industry 4.0 acceleration through the digitalization of asset-intensive industries, governments and cities, and webscale businesses, with mission-critical networks and digital automation solutions.

Our second pillar was about growing our enterprise business, focusing on two main market needs: the need for high-performance connectivity for hybrid hyper-scale clouds, and the need for mission-critical networks in asset-intensive industries and governments, resulting in Industry 4.0 acceleration driven by private networks and industrial automation. In 2020, we delivered on our ambition: (1) we expanded network sales into select vertical markets, with a focus on asset-heavy industries, including Transportation, Energy, Manufacturing and Logistics, as well as governments and webscale businesses, (2) we have become the leaders in the private wireless market, (3) we are well positioned in the industrial automation market, which we expect will be critical in the Fourth Industrial Revolution, and (4) we achieved double digit growth fueling Nokia's future growth.

Focus areas and progress

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3. Strengthen

Strengthen the software business with one Common Software Foundation.

The third pillar was about strengthening our software business with one Common Software Foundation. Nokia was once again, for the second consecutive year, rated as the world’s leading telco software business for both telecom software and services. Nokia Software’s performance was marked by a series of important product launches and by many key deal-wins, including one of the telco software industry’s largest ever deals with a key North American customer, and breakthrough wins with new innovative customers, like DISH, on the basis of our strong technology.

Focus areas and progress

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4. Diversify

Diversify the licensing business with new opportunities in automotive, consumer electronics, IoT and brand.

We made good progress against our fourth pillar, diversifying our licensing business beyond mobile devices and into new licensing domains such as automotive, consumer electronics, the Internet of Things (IoT) and brand licensing. Nokia Technologies has done a great job in building on the strength of its mobile device patent licensing and creating new licensing opportunities in the consumer ecosystem, and we see meaningful growth opportunities in expanding our scope.

Focus areas and progress

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5.Operational Excellence

Operational excellence for new levels of efficiency, productivity and industry cost leadership.

Operational excellence was the foundation for our strategic priorities. In addition to focused actions to improve our cash position, commercial discipline and operational improvements, we implemented various actions across Nokia to contribute to our commitment to successfully reduce costs in 2020.

Focus areas and progress

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“Rebalancing for growth” will be replaced with a refreshed corporate strategy

This will be announced at Capital Markets Day on March 18, 2021.

On October 29, 2020, Nokia announced it was embarking on a strategic review, aimed at renewing our strategy, to be announced at Capital Markets Day on March 18, 2021.

On December 16, 2020, we shared further information about Nokia’s strategic priorities and the market trends at the heart of our strategic beliefs going forward.

Phase 1 of strategy review: high-level strategic principles and new operating model

On October 29, 2020, Nokia announced the first phase of its new strategy, outlining high-level strategic observations alongside a new operating model designed to better position the company for changing markets and align with customer needs effective from January 1, 2021.

Our industry is undergoing profound changes. Industrial automation and digitalization are increasing customer demand for critical networks, with a trend towards open interfaces, virtualization, and cloud native software. This will revolutionize how we design, deploy, manage and sell our products and solutions. Our strategy renewal will ensure we are well positioned to leverage these trends, improve our performance and position the company for long-term value creation.

We announced that our strategy review had yielded four observations to further build on:

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We also announced that from January 1, 2021 Nokia will have four business groups structured around unique customer offerings, with ownership for becoming one of the technology and market leaders in their respective sector. They will also need to demonstrate a clear route for delivering shareholder value with return on capital employed as a key metric.

Our goal is to better align with the needs of our customers, and through that increase accountability, reduce complexity and improve cost-efficiency. Going forward, we will have a more rigorous approach to capital allocation and will invest to win in those segments where we choose to compete.

The new business groups are:

Phase 2: mid-point update on strategy and operating model

On December 16, 2020, Nokia provided a mid-point update on its strategy and operating model. We announced that Nokia was aligning itself to deliver critical networks to Communication Service Providers (CSPs), enterprises and webscales.

We synthesized our strategy analysis into six strategic beliefs:

We are positioning Nokia to lead in a world facing big challenges: environmental issues, resource scarcity, inequality and stalling productivity. Technology will be an essential part of the solution, with an increase in critical networks, which will extend to all corners of society.

Critical networks are advanced networks that run mission-critical services for companies and societies. They are becoming increasingly important and extending to all corners of society. This means that Nokia’s addressable market for critical networks with CSPs, webscales and enterprises is also extending. To position ourselves for long-term success, we have defined three focus areas:

Secure technology leadership

Customers will take a best-of-breed approach selecting network elements from multiple individual vendors who are able to offer the best performance per total cost of ownership. Nokia is aiming to be the technology leader in the areas it chooses to play in. We have a strong position in technologies that are important for critical networks, such as open and virtualized radio access networks and we are on course for a 100% cloud-native software portfolio.

Build cloud software and network services future

We see value in critical networks gradually shifting from monolithic systems to silicon, software and services. This will increase the importance of cloud-native and open solutions and lead to more revenue being captured through different business models. We are well-positioned to be a trusted partner in the industry transition to software-led solutions and as-a-service delivery models, as demand for critical networks accelerates. Based on our leading Common Software Foundation, Nokia is a leader in cloud-native software including 5G Core, Digital Operations, Monetization, Security, and Analytics/AI. We are the first to deploy a software portfolio this broad on any cloud, leveraging our modular technology framework. We are experienced in creating both carrier-grade performance networks and working with the world’s most demanding webscales. We will continue building our capabilities in this area to ensure technology and market leadership.

Strengthen our long-term research and patent portfolio

Continuing to strengthen Nokia’s long-term research and global patent portfolio is a key element in securing technology leadership. We are aiming for leadership in all domains: innovation, product, patents, and standardization. Committing to long-term investment in research and innovation will allow us to anticipate and capitalize on industry changes and position us at the front of the pack when new technology windows open.

With these as focus areas we will invest in a best-of-breed portfolio.

Our renewed operating model is designed to enable the delivery of our strategic ambitions, with a lean corporate center enabling fully accountable business groups.

The third phase of the strategy update, with detailed business group strategies, will take place on Capital Markets Day on March 18, 2021.

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Our history

Few companies have Nokia’s storied capacity for transformation, for the development of new technologies and for the ability to adapt to shifts in market conditions.

From its beginning in 1865 as a single paper mill operation, Nokia has found and nurtured success in several sectors over the years, including cables, paper products, rubber boots and tires, mobile devices and telecommunications infrastructure equipment.

Nokia’s sector-by-sector success over the years has mirrored its geographical rise: from a Finnish-focused company until the 1980s with a growing Nordic and European presence; to a genuine European company in the early 1990s; and with our acquisitions of Alcatel-Lucent, Gainspeed, Deepfield and Comptel in the 2010s, to a truly global company.

Nokia has been producing telecommunications equipment since the 1880s – almost since telephony began.

A storied past

When Finnish engineer Fredrik Idestam set up his initial wood pulp mill in Southern Finland in 1865, he took the first step in laying the foundations for Nokia’s capacity to innovate and seize opportunities. Sensing a growing demand for wood pulp products, Idestam opened a second mill shortly after on the Nokianvirta River, inspiring him to name his company Nokia AB.

Idestam’s sense of endeavor would continue to prevail throughout Nokia’s various phases.

In the 1960s, Nokia became a conglomerate comprising rubber, cable, forestry, electronics and power-generation businesses, resulting from the merger between Idestam’s Nokia AB and a phone and power cable producer called Finnish Cable Works Ltd. founded in 1912, as well as other businesses.

Transforming anew

It was not long before transformation would occur again.

Deregulation of the European telecommunications industry in the 1980s triggered new thinking and fresh business models.

In 1982, Nokia introduced both the first fully digital local telephone exchange in Europe and the world’s first car phone for the Nordic Mobile Telephone analog standard. The breakthrough of GSM (Global System for Mobile Communications) in the 1980s introduced more efficient use of radio frequencies and higher-quality sound. The first GSM call was made with a Nokia phone over the Nokia-built network of a Finnish operator called Radiolinja in 1991.

It was around this time that Nokia made the strategic decision to make telecommunications and mobile phones our core business. Our other businesses, including aluminum, cables, chemicals, paper, rubber, power generation and television, were subsequently divested.

By 1998, Nokia was the world leader in mobile phones, a position it enjoyed for more than a decade.

And still the business and technology worlds would continue to evolve, as would Nokia.

A shifting industry

In 2007, Nokia combined its telecoms infrastructure operations with those of Siemens to create the NSN joint venture. We later bought Siemens’ stake in NSN in 2013 as the business was emerging from a successful strategy shift and the reality of the Fourth Industrial Revolution of connected devices, sensors and people was starting to take shape.

In 2011, we joined with Microsoft to strengthen our position in the highly competitive smartphone market, which in 2014 resulted in the sale of our Devices & Services business. Nokia emerged from the transaction with a firm financial footing and three strong businesses – Nokia Networks, HERE and Nokia Technologies – focused on connecting things and people.

But Nokia’s transformation was not complete. Our former HERE digital mapping and location services business, an arena we entered in 2006, had been a key pillar of Nokia’s operational performance. However, following a strategic review of the business by the Board in light of plans to acquire Alcatel-Lucent, Nokia decided to sell the HERE business in 2015.

Acquisition of Alcatel-Lucent and beyond

The acquisition of Alcatel-Lucent, completed in 2016, positions Nokia as an innovation leader in next-generation technology and services.

Our reputation as an innovation powerhouse has been bolstered by the addition of Bell Labs, now known as Nokia Bell Labs. It joined a future-focused business backed by tens of thousands of engineers and thousands of patent families, a reflection of Nokia’s innovation pedigree, which has produced an extensive array of benefits for consumers, businesses and society as a whole.

This acquisition helped us shape the connectivity and digitalization revolution before us – the Fourth Industrial Revolution – in which billions of people, devices and sensors are connected in a way that opens up a world of possibilities. These can make our planet safer, cleaner, healthier, more sustainable, more efficient and more productive.

This Fourth Industrial Revolution will require high-performance networks powered by 5G that will provide connectivity throughout the landscape. 5G will enable a wireless Internet of Things (IoT), helping to automate any physical business processes in verticals such as manufacturing, transport, logistics, smart cities, utilities, tele-medicine and environmental management.

Nokia today is at the forefront of the 5G evolution through our technology innovations, including 3 500 5G patent families, and we continue to drive open interfaces, virtualization and cloud-native software. We partner with communication service providers (CSPs), enterprise customers and webscales.

Nokia’s long history is marked by change and reinvention. We have always been excited by where technology will lead us as we seek to enable the human possibilities of a connected world. We will continue to innovate, reimagining how technology works for us discreetly while blending into, and enriching, our daily lives.

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Innovation

By driving tomorrow’s innovation while delivering today’s technology, we help make businesses more productive, environments cleaner, workplaces safer, economies stronger and enrich people's lives. Our long-standing commitment to innovation enables our customers to deliver extraordinary, transformative experiences. Working alongside communication service providers (CSPs) and enterprise customers across industries and around the world, we are building the future technologies that will make Industry 4.0 a reality and enhance virtually every aspect of life.

Research and development

Our research and development (R&D) efforts are led by our business groups and by Nokia Bell Labs, the world-renowned industrial research arm of Nokia. As one of the industry’s leading investors in communication technology R&D, we drive innovation across a comprehensive portfolio of network equipment, software, services and licensing opportunities across the globe. Our continuous product development in 5G, private wireless, intelligent analytics and automation, IoT, and next-generation software-defined networks enables our customers to address the needs of a digitally connected world.

We have a global network of R&D centers, each with individual technology and competence specialties. The main R&D centers are located in Belgium, Canada, China, Finland, France, Germany, Greece, Hungary, India, Italy, Japan, Poland, Portugal, Romania, Slovakia, the UK and the US. The ecosystems around each R&D center helps us to connect with experts on a global scale, and our R&D network is further complemented by cooperation with universities and other research facilities. In Belgium, China, Finland, France, Germany and the US, we have significant Nokia Bell Labs research activities where we are conducting disruptive research for the next phase of human existence.

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Nokia Bell Labs

The world-renowned industrial research and innovation arm of Nokia

Nokia Bell Labs has invented many foundational technologies that underpin information and communications networks and all digital devices and systems. The Nokia Bell Labs innovation engine accelerates technology development for Nokia’s core communication service provider and enterprise businesses while also researching the fundamental technologies that will shape future society. Over its more than 90-year history, Nokia Bell Labs research breakthroughs have produced nine Nobel Prizes, four Turing Awards and numerous other international awards.

With Nokia Bell Labs, we search for the fundamental limits of what is possible, rather than being constrained by the current state of the art.

We look to the future to understand essential human needs and the potential barriers to enabling this new human existence. We then use our unique diversity of research intellects, disciplines and perspectives to solve key problems through disruptive innovations with the power to enable new economic capabilities, societal behaviors, business models and types of services - in other words, we drive human and technological revolutions.

Nokia Bell Labs focuses on three core areas of innovation:

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Sales and Marketing

During 2020, customers of Networks fell mainly into two broad categories. The primary customer group consisted of communication service providers (CSPs), while enterprise customers represented another, relatively fast-growing, area.

Our Customer Operations (CO) organization was, throughout 2020, the primary interface to our CSP customers, with CO Americas focusing on our North America and Latin America markets, while CO EMEA & APAC held responsibility for our Asia Pacific, Europe, Greater China and Middle East & Africa markets. Active in around 120 countries, CO ensured, throughout 2020, that our customers were able to benefit from dedicated management attention and our teams’ deep understanding of local markets. Our strong customer relationships were supported by a regional and country-based approach and by customer teams, which have for a long time been – and continue today to be – the face of Nokia to our CSP customers.

In addition to sales, CO was – throughout 2020 – responsible for much of our project delivery, ensuring strong alignment between our customer-facing sales and delivery teams in each account. Our “One CDM” (customer delivery manager) model provided a strong counterpart to our sales-focused customer team setup, ensuring that customers have a seamless experience when working with Nokia.

Enterprise customers were in focus for Nokia and continue to grow in importance. Throughout 2020, enterprise customers were served by a dedicated sales force with a global presence, selling to enterprise customer groups – including transportation, energy, manufacturing and logistics, governments and webscale businesses – both directly and through channel partners (including system integrators, consulting companies, distributors and value-added resellers).

The CO organization also worked very closely throughout the year with Nokia Software to ensure the right level of customer focus and expertise in this crucial area, and with Nokia Enterprise to make sure we could efficiently serve both our CSP and enterprise customers. Nokia’s innovative “Service Provider as a Partner” sales approach – in which we work in partnership with operators to address customers in the enterprise space, continues to be a successful route to market for CSPs as well as for Nokia.

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Business groups

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Mobile Networks

Market overview

The primary market for our Mobile Networks business group includes technologies for Radio Access Networks (RAN) i.e. mobile access as well as Microwave Radio Links (MWR) for transport networks. Mobile access encompasses RAN technologies ranging from 2G/GSM to 5G/NR in licensed and unlicensed spectrum for both macro and small cell deployments. On October 29, 2020, as part of our new operating model, we announced that as of January 1, 2021 it was planned for Mobile Networks to have a wider remit, including RAN and MWR products, associated network management solutions, as well as network planning and optimization, network deployment and technical support services.

Business overview and organization

In Mobile Networks our goal is to be a technology leader in 5G/NR, Single RAN (2G/3G/4G/5G) and MWR and provide the best value to our customers as they evolve their networks. We continue to develop our 5G/NR portfolio according to the latest 3GPP specifications, we have declared more than 3 500 patent families as essential for 5G, and are proud of the number of industry firsts that we have achieved. In January 2020, an independent analytics firm, IPlytics GmbH, ranked Nokia #2 for ownership of granted 5G patents declared in at least one office, and an independent study by the consultancy company PA Consulting concluded that Nokia was #1 for ownership of granted patents that the researchers found essential to the 5G standard. We see a strong appetite for 5G across mobile markets, and we are the only mobile network vendor working with all the major operators in the world’s most advanced markets in the US, South Korea and Japan. We are also providing 5G technology in China.

We have a large global installed base in 2G/3G/4G that is providing us with the platform for success in 5G. We have more than 360 customers in 4G/LTE and a robust AirScale platform for Single RAN, which can be upgraded from 4G/LTE to 5G/NR. We built our AirScale portfolio and small cells, software and microwave transport solutions to work across all generations of technology and all relevant spectrum bands for efficient, simplified and optimized sites for our customers. In June 2020, we announced 5G AirScale Cloud RAN in vRAN 2.0 configuration, with full baseband in cloud including Virtualized Centralized Unit (vCU) and Virtualized Distributed Unit (vDU). In July 2020, we announced the addition of new open interfaces that would be built on top of our AirScale portfolio with a suite of O-RAN-defined interfaces expected in 2021.

This broad technology portfolio allows us to help our customers evolve to and launch 5G/NR networks. Nokia was involved in more than 188 5G/NR commercial engagements in 2020, with the total number of 5G commercial deals at 139 at the end of 2020. A total of 44 of those 5G networks were live in 2020 in Asia Pacific, China, the US, Europe, Middle East and Africa. At the end of 2020, we also include within our 139 5G commercial deals 19 public 5G deals with enterprise customers beyond Communication Service Providers (CSP), including the world's first 5G-based network for automated rail operation with Deutsche Bahn in Germany. We have delivered five million 5G/NR software upgradable radios, and we have delivered 5G/NR commercial networks in 600MHz, 700MHz, 800MHz, 850MHz, 2.5GHz (TDD), 3.5GHz, 26 GHz, 28GHz and 39GHz. We have launched commercially 5G/NR vRAN 1.0 which involves Cloud RAN for 5G/NR with a virtualized Centralized Unit (vCU). We have activated 4G/5G DSS (Dynamic Spectrum Sharing) and 5G Stand-Alone (SA) in commercial networks, including in T-Mobile US – the world’s first nationwide 5G SA network.

Competition

The RAN market is a highly consolidated market, and our main competitors are Huawei, Ericsson and Samsung. Smaller competitors include ZTE, Fujitsu, NEC, Altiostar, Mavenir, Parallel Wireless, JMA Wireless, KMW, Commscope, MTI, and Airspan, for example. The Microwave Radio Links market is more fragmented. There, besides Huawei and Ericsson, our key competitors include, for example, Ceragon, NEC and Aviat.

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Global Services

Market overview

Nokia deploys, supports and operates communication service providers’ (CSP) and enterprise networks. This includes network infrastructure services and professional services for mobile networks and managed operations for fixed, mobile, IP and optical domains. In addition, new growth areas are network cognitive services and analytics, deploying and operating networks in public sector, energy and transport markets and introducing new business models for CSPs, such as our Worldwide IoT Network Grid (WING).

Business overview and organization

Nokia’s services, solutions and multi-vendor capabilities guide CSPs in their digital transformation journey and help navigate through the evolving technology landscape, network complexity and data growth. We work with CSPs to improve end-user experience while providing support in day-to-day network planning, implementation, operations and maintenance.

The offering, which was part of the Global Services business group in 2020, allows Nokia to differentiate in the 5G market while helping CSPs prioritize their 5G investments and bring 5G-based services to the market faster. Nokia 5G digital services portfolio helps CSPs assess the technical choices and design and deploy end-to-end 5G networks that meet the needs of diverse 5G use cases such as cloud gaming, connected cars and autonomous factory robots.

A key focus area in Global Services is empowering CSPs to transform to digital service providers, supported by a digital architecture for the full lifecycle of network design, deployment, operations and technical support – for both legacy and cloud-based networks. The Nokia AVA cognitive use cases provide advanced AI and analytics as well as a common data lake to help boost network performance, operational efficiency and customer experience. We also help digital service providers to seize the possibilities of Internet of Things (IoT) and enter new markets using Nokia Worldwide IoT Network Grid (WING), which provides seamless connectivity across geographical borders and technologies. We enable our customers to enter new markets rapidly and with low risk through pay-as-you-grow or revenue share models.

Enterprise is a strategic growth area for Nokia. In 2020, Global Services was focused on enabling the digitalization of asset-intensive industries with connectivity-driven services and digital automation solutions. Our new digital service framework shortens sales cycles and drives rapid, repeatable service delivery helping our enterprise customers to minimize complexity. We deploy private broadband networks to accelerate the digitalization of industries, enabling higher productivity, operational efficiency and increased worker and asset safety. Our global expertise in managed services enables our enterprise customers to reap the benefits of operational transformation, managed security and network operations support for their new IP/MPLS and mission-critical private LTE networks.

Competition

In a market segment that combines products and services as well as managed services, Nokia competes against traditional network equipment providers such as Ericsson and Huawei, while for the service-led businesses such as cognitive, IoT and enterprise services, we see other competitors such as Cisco, HPE, and IBM emerging.

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Fixed Networks

Market overview

The primary market of Fixed Networks (FN) is the communication service providers (CSP). FN has been diversifying outside the CSP market into new segments such as new infrastructure wholesalers and enterprises. FN’s mission is to provide affordable ultrabroadband solutions to connect more people, sooner. FN builds solutions that deliver hundreds of megabits or even gigabit broadband to homes, small businesses and cell sites, and sustain that gigabit experience into every corner of the home using mesh Wi-Fi solutions. Fiber-to-the-home (FTTH) is now established as the main solution but other fiber-rich access technologies, such as fixed wireless access (FWA) and xDSL upgrades, continue to be an attractive complement. The key to making the universal “gigabit to the home” business case work – connect more people, sooner – is to select the right tool from a broad toolkit. In the 5G era, FN’s FWA and the reuse of FTTH for connecting denser 5G cells site grid are seeing significant traction.

Business overview and organization

The Fixed Networks focus is based on three pillars: fiber-based access infrastructure to bring a gigabit to every home, business and 5G cell site; Wi-Fi solutions to bring a gigabit into the home; and cloud/virtualization solutions to automate and simplify the network. Innovation and thought leadership are a cornerstone of all three areas.

The first pillar of the strategy is about offering the right technology mix to deliver gigabit access to more people, everywhere. It includes fiber, fixed wireless access, and xDSL upgrades, and we have a top three position in every market we serve. Nokia is a leader in fiber access with more than 270 customers. In 2020, FN introduced the industry’s first 25G PON technology. FN remain a market leader in copper technologies, such as VDSL and G.fast and have taken a leading position in the burgeoning fixed wireless access market, including 4G and 5G outdoor receivers and 5G indoor gateways, with more than 85 customers and trials. Our in-house developed Quillion chipset ensures we have best-in-class performance across our portfolio and can innovate at pace.

The second pillar is about ensuring perfect gigabit connectivity throughout the home. Our Nokia WiFi portfolio includes mesh Wi-Fi solutions to provide Wi-Fi coverage in every corner of the building and advanced cloud-based controllers that not only manage and optimize Wi-Fi performance in a single home but also between buildings and across a network. In 2020, we were first to market with a self-optimizing mesh Wi-Fi 6 solution, providing a superior experience for consumers. We have 45+ CSP references for our Nokia WiFi solution.

As CSPs continue to combine different technologies and deployment models, their networks become more complex. The third pillar of the Fixed Networks strategy looks at simplifying and automating operations, with the cloud and virtualization playing a key role. FN’s Software-Defined Access Network (SDAN) solution takes an open and pragmatic approach, with concrete use cases such as access network slicing, and a smooth evolution path for the installed base. Advances in FN’s SDAN controller cloud platform, Altiplano, take CSPs a step closer to the autonomous network. There are now more than 250 SDAN-ready deployments.

Underpinning these three pillars is FN’s market-leading services that provide CSPs with smart and efficient ways to transform their networks, adopt new technologies and operate their networks. FN has more than 75 network transformation projects to its name and 30+ multi-vendor maintenance contracts.

Competition

The competitive landscape in fixed access for CSPs has two major key players, Nokia and Huawei. ZTE follows in third position. Despite the dominant position in China held by these two Chinese players, Nokia holds a #2 position worldwide, particularly strong in optical line termination (OLT), with 37% market share in the 12 months rolling period ending in June 2020. Smaller players, such as Calix and Adtran, are relevant in North America and Fiberhome in China but have limited footprint worldwide, with an estimated market share below 10% and no comparable breadth of portfolio. Nokia is the only major vendor with a trustworthy market-leading position in every territory.

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IP/Optical Networks

Market overview

CSP networks are under tremendous pressure from cloud-based applications, ultra-broadband evolution and emerging Industry 4.0 applications and services. Our IP and optical networking solutions reduce time to market and risk as CSPs launch new consumer, mobile and enterprise services, rapidly scale them to meet surging demands, and continually add new features and functions. Our insight-driven network automation solutions help to further ensure that network services are delivered with consistent quality, reliability and security and that restorative actions are automatically initiated when any parameter varies beyond set limits. Overall, our comprehensive portfolio enables CSPs to build and operate automated, secure, and high-performance networks at massive scale.

These carrier-grade, mission-critical attributes also address the needs of – and are valued by – other customer segments including webscale companies and enterprises. In the enterprise segment, we address verticals including transport, energy and the public sector as well as healthcare, finance and retail enterprises leveraging similar solution sets augmented with purpose-built capabilities.

Business overview and organization

Our IP/Optical Networks business group provides the high-performance and massively scalable networks that underpin the digital world’s dynamic interconnectivity. Our portfolio of robust and innovative systems, software and services play across multiple domains including IP routing and switching, optical networking and network automation.

The IP/Optical Networks product portfolio includes:

Competition

Our competitive landscape in this space includes Cisco, Juniper Networks, Huawei, and Ciena.

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Nokia Software

Market overview

Nokia Software holds the #1 position in the telecoms software market⁽¹⁾.

Its market is driven by large-scale service and network operations automation; digital business transformation; and the shift to 5G and the cloud. The business also saw an increase in operator demand to optimize and secure their networks to cope with the communications shifts of COVID-19.

Business overview and organization

Built on Nokia’s cloud-native Common Software Foundation (CSF), Nokia’s multi-vendor and multi-network software solutions enrich and secure user experiences; automate operations and infrastructure; and drive new revenue streams and cost-efficiencies. Nokia’s CSF ensures our software solutions are easy to deploy, integrate, use, scale and service. Nokia was the first to build a cloud-native software platform at scale in the telecoms software market.

Nokia Software’s business has two parts, Applications and Core. Nokia Software applications improve customer experiences with better intelligence, security, operations and services. Nokia’s core network solutions span 5G, mobile broadband, and IoT; and simplify operations and enable new services and revenue streams.

Nokia Software’s strategy is to focus investments in the strategic areas of 5G, automation, portfolio integration, and digital innovation platforms. Investment in a cloud-native CSF and our multi-vendor, multi-network agnostic approach sets us apart from most large competitors. Against smaller players, Nokia has the advantage of global delivery capabilities and a large installed base, backed by a broad portfolio.

Competition and ecosystem

Nokia’s software competitors fall into two main categories: independent software vendors (ISVs) and network equipment providers (NEPs). The main ISV competitors are Amdocs, Netcracker and Oracle. The main NEP competitors are Huawei and Ericsson, which sell software as part of large infrastructure deals. In addition, we see increasing competition from niche, boutique software players.

In the past year, “webscale” players such as Amazon Web Services, Google Cloud Platform, and Microsoft Azure have taken actions to increase their service offering to CSPs. These developments will accelerate the move to cloud-native telecoms software, on which Nokia Software has geared its strategy, and will open new possibilities for partnering with these webscale players.

While also this market segment faces some pricing pressure, telecom software provides significant long-term opportunity for vendors that can drive technology and operational leadership and set the pace of transformation in the industry.

Nokia’s software business is #1 in applications and applications services by revenue, according to Analysys Mason, and has 20–25% market share in core networks, according to Nokia data.

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Nokia Enterprise

Market overview

In 2020, Nokia continued to grow its business with enterprise customers focusing on two main market needs – the need for high-performance connectivity for hybrid hyperscale clouds and the need for mission-critical networks in asset-intensive industries. Driven by the continued growth in cloud adoption, our webscale customers continue to require high-performance cloud connectivity. In 2020, we expanded our market opportunity in high-performance cloud connectivity portfolio with our data center switching launch. We also enhanced our private wireless portfolio, with the launch of our 5G standalone capabilities and Modular Private Wireless solutions.

Our enterprise customers were highly impacted by COVID-19. However, in aggregate, our customers proved to be resilient as they adapted to social distancing and local health requirements, which redefined the global workplace with remote and autonomous workplaces. In addition, global business value shifted towards resilient global supply chains as well as the prioritization of business continuity plans, increasing the demand for mission-critical networking. We continue to monitor the overall market impact of the pandemic across the enterprise segments we serve.

Nokia continues to address the enterprise market through a combination of direct sales and service provider, system integrators, industrial, direct and indirect reseller, and distribution partners.

We bring our customers a lauded ethics track record, and corporate values that instill integrity and security, coupled with market expertise tailored to their individual needs. Our comprehensive services portfolio wraps our technology offers with deployment assurance, ensuring our customers get performance, innovation and results from the solutions they’ve trusted us to mobilize in their networks.

Business overview and organization

Nokia has been serving enterprise clients for decades. In that time, we have developed a deep knowledge of the business requirements of the segments we serve. We leverage this long-developed expertise, to architect, build, and deliver solutions to our customers and our partners’ end-customers. Those solutions include innovative, high-performance, carrier-grade wireless networks, fixed networks, IP routing, optical networks, and communication and security software. In addition, we leverage our ecosystem of partners to round out our solutions in areas where we do not participate broadly such as devices, autonomous guided vehicles, and spectrum. We pre-integrate many of our solutions and customize these towards segment-specific requirements and a suite of lifecycle services.

Our innovation roadmap is the Nokia Bell Labs Future X for industries network architecture. It provides a blueprint for industrial networks, intelligently combining high-performance, ubiquitous access with intelligent IP/optical networks, and agile multi-cloud-enabled solutions for industrial automation. Analytics-driven digital value platforms and business applications are tailored to the unique needs of each industry – with security embedded at all levels of the architecture.

Our approach has been validated in the market with 1 545 mission-critical customers and our private wireless solutions are used by 260 customers globally.

Our Energy, Transportation, Government and Cities, and Manufacturing and Logistics segment customers continued to deploy mission-critical connectivity and applications powered by Industry 4.0 acceleration and the need to connect, automate, manage, and control critical industrial assets.

Transportation

Nokia continues to expand our market penetration into railways, aviation, and maritime segments. We deliver solutions that improve workplace safety and efficiency, enable autonomous operations, and help build better customer experiences. Our solutions support railway signaling, air traffic control critical communications, airport communications, and connectivity as well as effectively automating passenger screening for health and safety. Nokia is well positioned in the railway market as it transitions to the 5G-enabled Future Railway Mobile Communications System (FRMCS), a new standard for railway communications.

Energy

Nokia provides energy companies, including power utilities, mining, and oil and gas companies, with private wireless networks that offer an affordable, agile, and secure way to deliver improved automation to a range of mission-critical operations in remote and harsh environments, from wind farms to offshore oil rigs, protecting lives, ensuring business continuity, and increasing productivity. Our solutions have proved essential during COVID-19 as we helped our power utility customers adapt to major changes in grid usage – powering up field hospitals, and balancing power distribution needs as usage shifted from commercial to residential.

Government and cities

The Public Safety, Smart City, and National Government segments were influenced in 2020 by the response to COVID-19 and the need for broadband to support citizens with education and work in a remote and virtual environment. Globally, we anticipate an acceleration of Government Driven Broadband Initiatives (GDBI) and digital government projects stemming from gaps in broadband availability, which have become essential today. Our community broadband solutions help governments, state, provincial, local agencies, and municipal power utilities to address inner-city connectivity coverage gaps and address rural broadband needs.

Nokia’s public safety solutions provide first responders with real-time, broadband mission-critical communications that help save lives and manage crisis situations.

We also help design future-proof cities powered by the required connectivity infrastructure and applications to deliver a safer and more inclusive environment for all citizens. In the realm of Smart Cities, Nokia offers the 'city as a platform' solution, a unique platform-based approach to provide connectivity, data sharing and usage control capabilities for municipal services such as smart parking, lighting, traffic management. The outcome for municipalities is an improved quality of life of all citizens.

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Manufacturing and logistics

Nokia enables Industry 4.0 acceleration in the Manufacturing, Supply Chain, and Logistics segments. Our private wireless networking solutions and IoT platforms help to automate operations, increase productivity, and reduce costs. Through the digitalization and automation of operational systems, manufacturers and logistics companies can build resiliency and ensure business continuity during impact events.

Nokia has built a foundational customer base providing easy to implement private wireless solutions to enable greater degrees of factory and warehouse automation. In 2020, we gained traction with deployments with A1 and Magna International in Austria, and Toyota Production Engineering in Japan, and Bosch in Germany.

Webscale companies

Webscale companies handle billions of transactions per day in their networks. These customers demand hyper-efficiency in content delivery and support exceptional online experiences. We help connect webscale infrastructure with high-performance IP routing, open optical systems, and alternative access and subsea networking solutions. Nokia co-develops advanced open network components with our webscale customers to enhance the performance of public and hybrid cloud platforms, driving market leadership and enabling timely product availability. In 2020, we announced our new data center switching portfolio with initial customer support from Apple, BT, LINX, Equinix, Turkcell, and others.

Competition

We operate in a complex ecosystem where some companies are our customer, our partner, and our competitor. In that ecosystem, our competitors range from broad networking companies with which we have competed for some time, and specialized competitors focusing on a single customer segment, to a large set of new, smaller competitors who are typically attracted to the transformational value and opportunity of 5G.

Networking competitors include Cisco, Juniper, Ciena, Ericsson, and Huawei (in select geographies). In addition to our primary competitors, we also face more segment specific competitors such as Motorola, Calix, and Adtran in the public sector, Kontron in the transportation segment, Arista in the webscale segment, and in the private wireless domain companies such as Athonet and Celona.

Nokia maintains a key advantage for our customers as we offer solutions and expertise spanning broadband wireless, LTE and 5G and we have proven leadership in the market with successful private wireless deployments. Our unique Digital Automation and Modular Private Wireless are leading solutions in the market⁽¹⁾.

Nokia has a proven co-development track record of working with our customers on high-performance product development that results in market breakthroughs. Our high-performance FP4 and PSE-V digital signal processors (DSP) optimize power, performance, and cost across multiple form-factors with our DSPs supporting applications from metro to subsea deployments. Our focus on open systems offers customers flexibility, business agility and reduces the risks associated with vendor lock-in.

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Nokia Technologies

Market overview

Nokia Technologies is responsible for managing and monetizing Nokia’s intellectual property, including patents, technologies, and the Nokia brand, building on Nokia’s continued innovation and decades of research and development (R&D) leadership. We have three focus areas: Patent Licensing which monetizes our patent portfolio; Technology Licensing which helps device manufacturers integrate Nokia’s technologies into their products; and Brand Partnerships, which licenses the Nokia brand.

Business overview and organization

Nokia Technologies is focused on licensing.

Research and development

The Media Technologies Research unit in Nokia Technologies continues to invent and develop relevant and valuable solutions in emerging consumer experiences, with the target also to further promote the standardization of important audio and video technologies.

Patents and licenses

For more than 30 years, we have defined many of the fundamental technologies used in virtually all mobile devices and taken a leadership role in standards setting. As a result, we have been ranked #1 in several independent third-party studies for our 2G, 3G, 4G and 5G patents that have been declared essential for cellular standards. We continue to generate new intellectual property at a robust rate and expect to remain in the top tier in 5G standard essential patents.

As part of our active portfolio management approach, we are continuously evaluating our collective assets and taking actions to optimize the size of our overall portfolio while preserving the high quality of our patents. At the end of 2020, our portfolio stood at around 20 000 patent families (each family being composed of several individual patents), built on combined R&D investments of more than EUR 129 billion over the last two decades. This comprises more than 3 800 patent families declared as essential to one or more cellular standard, including more than 3 500 patent families declared as essential to the 5G standard, which enable all 5G networks, connected 5G devices and ‘things’.

We continue to refresh our portfolio from R&D activities across all Nokia businesses, filing patent applications on more than 1 500 new inventions in 2020.

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Principal industry trends

Networks and Nokia Software

We are a leading vendor in the network and IP infrastructure, software, and the related services market. We provide a broad range of products, from the hardware components of networks used by communication service providers and increasingly by customers in other select verticals, to software solutions, as well as services to plan, optimize, implement, run and upgrade networks. In 2020, our Networks reportable segment was comprised of the following businesses: Mobile Access, Fixed Access, IP Routing and Optical Networks. We aim to be innovation leaders, drawing on our frontline R&D capabilities to deliver leading products and services for our customers, and ultimately ensure our long-term value creation.

Industry trends

The network and IP infrastructure, software and related services industry has witnessed three main trends in recent years, which have also affected our Networks and Nokia Software segments. First, the increase in the use of data services and the resulting exponential growth in data traffic has led to an increased need for high-performance, high-quality and highly reliable networks. The rise in data traffic has, however, not been directly reflected in growth of communication service providers’ revenue. Consequently, there is an imperative to be efficient and cost-competitive for both communication service providers and network infrastructure and services vendors.

Second, we are witnessing continued consolidation among communication service providers, driven by their desire to provide a wider scope of services, especially through the convergence of disparate network technologies across mobile, fixed, and IP and optical networks. In order to improve networks in terms of coverage, capacity and quality, communication service providers are continuing their transition to all-IP architectures, with an emphasis on fast access to their networks through fiber, LTE and 5G access and new digital services delivery. We are also seeing similar trends with cable operators, who are investing in the deployment of high-speed networks.

Third, we see a stronger demand for large high-performance networks in some key areas outside the traditional communication service provider space. Webscale companies and extra-large enterprises - such as Apple, Facebook, Google, Alibaba and Amazon - are investing in cloud technology and network infrastructure to build these high-performing, secure networks. In addition, other target vertical markets such as energy, transportation and the public sector are investing to build carrier-grade, mission-critical networks.

The first three pillars of our strategy in 2020 were aligned with these industry trends for our Networks and Nokia Software segments. We continued to execute well on our strategy, with a particular focus on high-performance, end-to-end networks, expansion into new select verticals and building a strong software business at scale. More information about our strategy in 2020 can be found in “Business Overview – Our Strategy”.

Additionally in 2020, we continued to witness some customers reassessing their vendor selection strategies, in light of ongoing security concerns. We are seeing some gains with operators who are reconsidering their vendors as a result of geopolitical issues. We estimate that we have won about half of the value of such deals available to date.

Pricing and price erosion

While we experience varying levels of price erosion across our businesses, it is particularly evident in our Mobile Access business group, given the highly standardized nature of the business. In 2020, we witnessed increased competitive intensity in some accounts, particularly in North America, as certain competitors sought to take share in 5G.

Product mix

Our Networks and Nokia Software segments offer a combination of hardware, software and services. The profitability of our Networks and Nokia Software segments is affected by our product mix, including the share of software in the sales mix. For example, this is particularly evident during large technology cycles, as initial deployments consist of a larger portion of hardware and services and less software. As the initial phases of deployments tend to be lower margin, this is offset by the ongoing deployment of previous generation technologies, which tend to be higher margin. This ratio shifts more towards higher-margin software further into the cycle, as additional capacity and features are deployed. In 2020, we experienced a decrease in network deployment services, following elevated levels in 2019.

Products and services also have varying profitability profiles. Hardware and software products generally have higher gross margins than services, but they require significant R&D investment. Services are typically labor-intensive, while carrying low R&D investment, and have relatively low gross margins.

Seasonality and cyclical nature of projects

Net sales in our Networks and Nokia Software segments are affected by seasonality in the spending cycles of communication service providers, with generally higher sales in the fourth quarter, followed by generally lower sales in the first quarter. Also, we have recently witnessed that Networks and Nokia Software segments generate the majority of their respective operating profit and free cash flow in the fourth quarter. In addition to normal industry seasonality, there are normal peaks and troughs in the deployment of large infrastructure projects. As an example, the 5G technology cycle accelerated in 2020 and is expected to continue over the coming years. The timing of these projects depends on a number of factors, including new radio spectrum allocation, network upgrade cycles and the availability of new consumer devices and services, which in turn could affect the net sales of our businesses.

Continued operational efficiency improvements

In 2018, following the completion of the Alcatel-Lucent integration and the related cost savings program, we announced a new cost reduction program where we intend to target substantial savings while continuing to make further investments to drive future growth and higher returns. The savings were expected to come from a wide range of areas, including investments in digitalization to drive more automation and productivity, further process and tool simplification, significant reductions in central support functions to reach best-in-class cost levels, prioritization of R&D programs to best create long-term value, a sharp reduction of R&D in legacy products, driving efficiency from further application of our Common Software Foundation and innovative software development techniques, the consolidation of selected cross-company activities and further reductions in real estate and other overhead costs.

In 2020, we completed our cost savings program, generating the expected savings through the actions listed above. The cost savings program resulted in EUR 500 million of net benefits in full year 2020, compared to full year 2018.

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Cost of components and raw materials

There are several important factors driving the profitability and competitiveness of our Networks and Nokia Software segments: scale, operational efficiency, pricing, and cost discipline. The costs of our Networks products are comprised of, among others, components, manufacturing, labor and overheads, royalties and licensing fees, depreciation of product machinery, logistics and warranty and other quality costs. In 2020, margins in our Networks segment were positively impacted by progress in Mobile Access, where we continued to focus on driving improvements in our portfolio by strengthening our roadmaps, reducing product costs and improving our product performance.

Profitability can be affected by changes in the sales volume, as well as the requirement to source large volumes of components on short notice, which can impact the cost of sales or, in cases where component shortages emerge, the net sales.

Product design and serviceability

Factors such as product design and serviceability also have an impact on our cost structure with Networks. For example, product design decisions, such as the use of system-on-chip, or “SoCs” in our Mobile Access products, allow us to improve our product costs as the proportion of SoCs increases within our products. Additionally, costs can be reduced through improved product serviceability. In 2020, these factors contributed to the improving 5G product cost position.

Nokia Technologies

Nokia Technologies is focused on pursuing new licensing opportunities for our valuable intellectual property, including patents, innovative technologies and know-how, and the Nokia brand.

General trends in IPR licensing

In general, there has been increased focus on IPR protection and licensing in the market, and this trend is expected to continue. As such, new agreements are generally a product of lengthy negotiations and occasionally through arbitration or litigation, and therefore the timing and outcome may be difficult to forecast. Due to the structure of patent license agreements, the payments may be infrequent, at times may be partly retrospective, and the lengths of license agreements can vary.

Additionally, there are clear regional differences in the ease of protecting and licensing patented innovations. We have seen some licensees actively avoiding making license payments, and some licensors using aggressive methods to collect them; both behaviors have attracted regulatory attention. We expect discussion of the regulation of licensing to continue at both global and regional level. Some of those regulatory developments may be adverse to the interests of technology developers and patent owners, including us.

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Corporate governance

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Corporate governance statement

This corporate governance statement is prepared in accordance with Chapter 7, Section 7 of the Finnish Securities Markets Act (2012/746, as amended) and the Finnish Corporate Governance Code 2020 (the “Finnish Corporate Governance Code”).

Introduction

In 2020, we continued delivering on Nokia’s commitment to strong corporate governance and related practices. To do that, the Board activities are structured to develop the company’s strategy and to enable the Board to support the management on the delivery of it within a transparent governance framework. The table below sets out a high-level overview of the key areas of focus for the Board’s and its Committees’ activities during the year in addition to regular business and financial updates at each Board meeting and several reviews of the impacts and actions relating to the COVID-19 pandemic.

Furthermore, there were a number of significant corporate governance events in 2020. In addition to the new Board Chair and Vice Chair, the President and CEO and the Chief Financial Officer were changed and we also announced several changes in the Group Leadership Team structure and composition. We also held our first-ever fully remote annual general meeting at which the first vote was taken on the Remuneration Policy applicable to the Board members and the President and CEO.

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Changes in the Board, management and auditor in 2020

At the end of 2019 then Chair of the Board Risto Siilasmaa informed the Board’s Corporate Governance and Nomination Committee that he will no longer be available to serve on the Nokia Board of Directors after the Annual General Meeting in 2020. Mr. Siilasmaa had been a Nokia Board member since 2008 and served as Board Chair from 2012 onwards. He also served as interim CEO of Nokia from 2013 to 2014. Consequently, Vice Chair Sari Baldauf was elected as the new Chair of the Board and Kari Stadigh as the new Vice Chair following their re-election to the Board by the Annual General Meeting in 2020.

On March 2, 2020, Nokia’s Board of Directors appointed Pekka Lundmark as the President and CEO of Nokia and he started in his new role on August 1, 2020. The previous President and CEO Rajeev Suri stepped down from his position on July 31, 2020 while continuing to serve as an advisor to the Nokia Board until January 1, 2021.

On June 11, 2020, Nokia announced the appointment of Marco Wirén as the new Chief Financial Officer of Nokia, effective September 1, 2020. The previous Chief Financial Officer Kristian Pullola stepped down from his position on August 31, 2020.

On October 29, 2020, Pekka Lundmark announced the composition of the new Group Leadership Team, effective January 1, 2021. Refer to the section on the Group Leadership Team and the President and CEO below for further information.

On January 1, 2020 Deloitte Oy started as the new auditor of the company as result of the auditor rotation resolved by the Annual General Meeting in 2019.

Annual General Meeting 2020 and 2021

On March 18, 2020, Nokia cancelled the Annual General Meeting originally convened to be held on April 8, 2020 due to the COVID-19 pandemic and related restrictions on public gatherings.

On April 27, 2020, the Board resolved on extraordinary measures pursuant to the temporary legislation approved by the Finnish Parliament on April 24, 2020. In order to prevent the spread of the COVID-19 pandemic, the Annual General Meeting was convened to be held without shareholders and their proxy representatives being present at the meeting venue. Participation in the Annual General Meeting and use of shareholder rights was possible only by voting in advance, by submitting counterproposals and asking questions in advance.

The Annual General Meeting 2020 eventually took place at the Company’s headquarters in Espoo on May 27, 2020. Approximately 43 000 shareholders representing approximately 2 300 million shares and votes were represented at the Annual General Meeting through advance voting. The Annual General Meeting supported all of the Board’s proposals by at least 86 percent of the votes cast.

As the COVID-19 situation remains serious, Nokia Corporation’s Annual General Meeting 2021 is planned to be held on April 8, 2021 under extraordinary measures pursuant to the temporary legislation, which entered into force on October 3, 2020 to prevent the spread of the COVID-19 pandemic. Participation and exercise of shareholder rights in the meeting will be possible only by voting in advance and by submitting counterproposals and asking questions in advance. It is not possible for the shareholders or their proxy representatives to participate in the meeting at the meeting venue. Proposals of the Board of Directors to the Annual General Meeting 2021 were published on February 4, 2021.

Regulatory framework

Our corporate governance practices comply with Finnish laws and regulations, our Articles of Association approved by the shareholders and corporate governance guidelines (Corporate Governance Guidelines) adopted by the Board of Directors. Corporate Governance Guidelines reflect our commitment to good corporate governance. They include the directors’ responsibilities, the composition and election of the members of the Board and its Committees, and certain other matters relating to corporate governance. We also comply with the Finnish Corporate Governance Code issued by the Securities Market Association.

In addition, we comply with the rules and recommendations of Nasdaq Helsinki and Euronext Paris as applicable to us due to the listing of our shares on the exchanges. Furthermore, as a result of the listing of our American Depositary Shares on the New York Stock Exchange (NYSE) and our registration under the US Securities Exchange Act of 1934, we follow the applicable U.S. federal securities laws and regulations, including the Sarbanes-Oxley Act of 2002 as well as the rules of the NYSE, in particular the corporate governance standards under Section 303A of the NYSE Listed Company Manual. We comply with these standards to the extent such provisions are applicable to us as a foreign private issuer.

To the extent any non-domestic rules would require a violation of the laws of Finland, we are obliged to comply with Finnish law. There are no significant differences in the corporate governance practices applied by Nokia compared with those applied by the US companies under the NYSE corporate governance standards with the exception that Nokia complies with Finnish law with respect to the approval of equity compensation plans. Under Finnish law, stock option plans require shareholder approval at the time of their launch. All other plans that include the delivery of company stock in the form of newly issued shares or treasury shares require shareholder approval at the time of the delivery of the shares unless a shareholder approval has been granted through an authorization to the Board, a maximum of five years earlier. The NYSE corporate governance standards require that the equity compensation plans are approved by the company’s shareholders. Nokia aims to minimize the necessity for, or consequences of, conflicts between the laws of Finland and applicable non-domestic corporate governance standards.

In addition to the Corporate Governance Guidelines adopted by the Board, the Committees of the Board have adopted charters that define each Committee’s main duties and operating principles. The Board has also adopted the Code of Conduct that applies to directors, executives, and employees of Nokia, as well as employees of Nokia’s wholly-owned affiliates and subsidiaries.The Code of Conduct also applies to directors, officers, and employees of other business entities (such as joint ventures) in which Nokia owns a majority of the shares or exercises effective control. Furthermore, the Board has adopted the Code of Ethics applicable to our key executives, including the President and CEO, CFO and Corporate Controller.

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Main corporate governance bodies of Nokia

Pursuant to the provisions of the Finnish Limited Liability Companies Act (2006/624, as amended) (the Finnish Companies Act) and Nokia’s Articles of Association, the control and management of Nokia are divided among the shareholders at a general meeting, the Board, the President and CEO and the Group Leadership Team, chaired by the President and CEO.

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General Meeting of Shareholders

Nokia shareholders play a key role in corporate governance, with our Annual General Meeting offering a regular opportunity to exercise their decision-making power in the company. In addition, at the meeting the shareholders may exercise their right to speak and ask questions, although in 2020 the use of shareholder rights happened by remote means only due to the COVID-19 pandemic and related precautions taken in order to ensure the health and safety of our shareholders, employees and other stakeholders. Refer to section “Introduction–Annual General Meeting 2020 and 2021” above for further information.

Each Nokia share entitles a shareholder to one vote at general meetings of Nokia. The Annual General Meeting decides, among other things, on the election and remuneration of the Board, the adoption of the annual accounts, the distribution of profit shown on the balance sheet, and discharging the members of the Board and the President and CEO from liability, as well as on the election and fees of the external auditor. Starting from the 2020 Annual General Meeting, the Remuneration Policy shall be presented to the general meeting at least every four years and the Remuneration Report annually from 2021. Resolutions regarding the policy and report are advisory.

In addition to the Annual General Meeting, an Extraordinary General Meeting may be convened when the Board considers such a meeting to be necessary, or when the provisions of the Finnish Companies Act mandate that such a meeting must be held.

Board of Directors

The operations of Nokia are managed under the direction of the Board, within the framework set by the Finnish Companies Act and Nokia’s Articles of Association as well as any complementary rules of procedure as defined by the Board, such as the Corporate Governance Guidelines and the charters of the Board’s Committees.

Election and composition of the Board of Directors, election of the Chair and Vice Chair of the Board and the Chairs and members of the Board’s Committees

Pursuant to the Articles of Association of Nokia Corporation, we have a Board that is composed of a minimum of seven and a maximum of 12 members. The Board is elected at least annually at each Annual General Meeting with a simple majority of the shareholders’ votes cast at the meeting. The term of a Board member begins at the close of the general meeting at which he or she was elected, or later as resolved by the general meeting, and expires at the close of the following Annual General Meeting. The Annual General Meeting convenes by June 30 annually.

Our Board’s leadership structure consists of a Chair and Vice Chair elected annually by the Board, and confirmed by the independent directors of the Board from among the Board members upon the recommendation of the Corporate Governance and Nomination Committee. The Chair of the Board has certain specific duties as stipulated by Finnish law and our Corporate Governance Guidelines. The Vice Chair of the Board assumes the duties of the Chair of the Board in the event he or she is prevented from performing his or her duties.

The independent directors of the new Board also confirm the election of the members and chairs for the Board’s Committees from among the Board’s independent directors upon the recommendation of the Corporate Governance and Nomination Committee and based on each Committee’s member qualification standards. These elections take place at the Board’s assembly meeting following the general meeting.

Board diversity

The Board has adopted principles concerning Board diversity describing our commitment to promoting diverse Board composition and how diversity is embedded into our processes and practices when identifying and proposing new Board candidates as well as re-election of current Board members.

At Nokia, diversity is not a static concept but rather a relevant mix of required elements for the Board as a whole that evolves with time based on, among other things, the relevant business objectives and future needs of Nokia. The Board diversity is treated as a means of improvement and development rather than an end in itself. Diversity of our Board is considered from a number of aspects including, but not limited to, skills and experience, age, nationality, ethnicity, cultural and educational backgrounds, gender identity, sexual orientation as well as other individual qualities. Both genders shall be represented on the Board.

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Nokia acknowledges and supports the resolution adopted by the Finnish Government on February 17, 2015 on gender equality on the boards of directors of Finnish large and mid-cap listed companies. We report annually our objectives relating to both genders being represented on our Board, the means to achieve them, and the progress we have made in achieving them. We have met our aim to have representation of at least 40% of both genders on our Board.

Currently there are six different nationalities represented in the Board and 44% of the Board members are female.

(1)   Terms as Nokia Board member before the Annual General Meeting on May 27, 2020.

(2)   As of May 27, 2020.

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Experience and skills of the Board members

Members of the Board of Directors

Until the Annual General Meeting held on May 27, 2020, the Board consisted of 10 members: Sari Baldauf (Vice Chair), Bruce Brown, Jeanette Horan, Edward Kozel, Elizabeth Nelson, Olivier Piou, Risto Siilasmaa (Chair), Søren Skou, Carla Smits-Nusteling and Kari Stadigh.

The Annual General Meeting held on May 27, 2020 elected nine members to the Board for a term ending at the close of the next Annual General Meeting. Sari Baldauf, Bruce Brown, Jeanette Horan, Edward Kozel, Elizabeth Nelson, Søren Skou, Carla Smits-Nusteling and Kari Stadigh were re-elected and Thomas Dannenfeldt was elected as a new member. Following the meeting, the Board also elected Sari Baldauf to serve as the new Chair and Kari Stadigh as the new Vice Chair of the Board.

Proposals of the Board of Directors to the Annual General Meeting 2021 were published on February 4, 2021. Elizabeth Nelson has informed that she will no longer be available to serve on the Nokia Board of Directors after the Annual General Meeting. Consequently, the Board proposes, on the recommendation of the Board’s Corporate Governance and Nomination Committee, that the following eight current Board members be re-elected as members of the Nokia Board of Directors for a term ending at the close of the next Annual General Meeting: Sari Baldauf, Bruce Brown, Thomas Dannenfeldt, Jeanette Horan, Edward Kozel, Søren Skou, Carla Smits-Nusteling, and Kari Stadigh. The Corporate Governance and Nomination Committee will also propose in the assembly meeting of the new Board of Directors that Sari Baldauf be re-elected as Chair of the Board and Kari Stadigh as Vice Chair of the Board, subject to their election to the Board of Directors.

The current and proposed members of the Board are all non-executive. For the term that began at the Annual General Meeting 2020 and for the term starting from the Annual General Meeting 2021, all Board member candidates have been determined to be independent from Nokia and significant shareholders under the Finnish corporate governance rules and the rules of the NYSE, as applicable. Any possible changes impacting the independence assessment would be assessed as of the date of the Annual General Meeting.

We do not have a policy concerning the combination or separation of the roles of the Chair of the Board and the President and CEO. Our leadership structure is dependent on our needs, shareholder value and other relevant factors applicable from time to time, while respecting the highest corporate governance standards. In 2020, the roles of the Chair of the Board and the President and CEO were separate.

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Biographical details of our current Board members

Chair Sari Baldauf

b. 1955

Chair of the Nokia Board. Board member since 2018. Chair since 2020. Member of the Corporate Governance and Nomination Committee and the Technology Committee.

Master of Business Administration, Helsinki School of Economics and Business Administration, Finland. Bachelor of Science, Helsinki School of Economics and Business Administration, Finland. Honorary doctorates in Technology (Helsinki University of Technology, Finland) and Business Administration (Turku School of Economics and Business Administration and Aalto University School of Business, Finland).

Executive Vice President and General Manager, Networks Business Group, Nokia, 1998–2005. Various executive positions at Nokia in Finland and the United States 1983–1998.

Member of the Supervisory Board and Member of the Nomination Committee of Daimler AG. Member of Supervisory Board of Daimler Truck AG. Member of the Board of Directors and Chair of the Audit Committee of Aalto University. Chair of the Board of Directors of Vexve Armatury Oy. Senior Advisor of DevCo Partners Oy. Member of the Board of Directors of Demos Helsinki. Member of the Board of Directors and Member of the Executive Committee of Technology Industries of Finland.

Member of the Supervisory Board of Deutsche Telekom AG 2012–2018. Chair of the Board of Directors of Fortum Oyj 2011–2018. Member of the Board of Directors of Akzo Nobel 2012–2017.

Vice Chair Kari Stadigh

b. 1955

Vice Chair of the Nokia Board. Board member since 2011. Vice Chair since 2020. Chair of the Corporate Governance and Nomination Committee and member of the Personnel Committee.

Master of Science (Eng.), Helsinki University of Technology, Finland. Bachelor of Business Administration, Hanken School of Economics, Helsinki, Finland.

Group CEO and President of Sampo plc 2009–2019. Deputy CEO of Sampo plc 2001–2009. President of Sampo Life Insurance Company Limited 1999–2000. President of Nova Life Insurance Company Ltd 1996–1998. President and COO of Jaakko Pöyry Group 1991–1996.

Member of the Board of Directors of Metso Outotec Corporation.

Chair of the Board of Directors of Mandatum Life Insurance Company Limited 2001–2019. Chair of the Board of Directors of If P&C Insurance Holding Ltd 2002–2019. Member of the Board of Directors of Nordea Bank AB (publ) 2010–2018. Chair of the Board Risk Committee (BRIC) of Nordea Bank AB (publ) 2011–2018.

Bruce Brown

b. 1958

Nokia Board member since 2012. Chair of the Personnel Committee. Member of the Corporate Governance and Nomination Committee and the Technology Committee.

MBA Xavier University, the United States. BS (Chemical Engineering), Polytechnic Institute of New York University, the United States.

Chief Technology Officer of the Procter & Gamble Company 2008–2014. Various executive and managerial positions in Baby Care, Feminine Care, and Beauty Care units of the Procter & Gamble Company since 1980 in the United States, Germany and Japan.

Member of the Board of Directors, the Audit Committee and the Nominating and Corporate Governance Committee of P. H. Glatfelter Company.

Member of the Board of Directors, the Audit Committee and the Compensation Committee of Medpace Inc 2016–2019. Member of the Board of Directors of Agency for Science, Technology & Research (A*STAR) in Singapore 2011–2018.

Thomas Dannenfeldt

b. 1966

Nokia Board member since 2020. Member of the Audit Committee and the Technology Committee.

Degree in Mathematics, University of Trier, Germany.

Chief Financial Officer of Deutsche Telekom AG 2014–2018. Chief Financial Officer of Deutsche Telekom’s German operations 2010–2014. Various operational positions (sales, marketing, customer care, finance and procurement in fixed and mobile business, national and international positions) in Deutsche Telekom 1992–2010.

Chair of the Supervisory Board of CECONOMY AG and member of the Board of Advisors at axxessio GmbH.

Member of the Board of Directors of T-Mobile US 2013–2018 and Buy-In 2013–2018. Chair of the Board of Directors of T-Systems International 2013–2018 and EE 2014–2016.

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Jeanette Horan

b. 1955

Nokia Board member since 2017. Member of the Audit Committee and the Technology Committee.

MBA, Business Administration and Management, Boston University, the United States. BSc, Mathematics, University of London, the United Kingdom.

Various executive and managerial positions in IBM 1998–2015. Vice President of Digital Equipment Corporation 1994–1998. Vice President, Development of Open Software Foundation 1989–1994.

Member of the Supervisory Board at Wolters Kluwer, and the Chair of the Remuneration Committee. Member of the Board of Advisors at Jane Doe No More, a non-profit organization. Member of the Board of Directors of the Ridgefield Symphony Orchestra, a non-profit organization.

Member of the Board of Advisors of Cybereason 2017–2018. Member of the Board of Directors of West Corporation 2016–2017 and Microvision 2006–2017.

Edward Kozel

b. 1955

Nokia Board member since 2017. Chair of the Technology Committee and member of the Audit Committee.

Degree in Electrical Engineering and Computer Science, University of California, the United States.

President and CEO of Range Networks 2013–2014. Owner of Open Range 2000–2013. Chief Technology and Innovation Officer and member of the Board of Management of Deutsche Telekom 2010–2012. CEO of Skyrider 2006–2008. Managing Director of Integrated Finance 2005–2006. Senior Vice President, Business development and Chief Technology Officer and Board Member of Cisco 1989–2001.

Member of the Advisory Board at Telia Ventures.

Various Board Memberships in 1999–2009.

Elizabeth Nelson

b. 1960

Nokia Board member since 2012. Member of the Audit Committee and the Personnel Committee.

MBA (Finance), the Wharton School, University of Pennsylvania, the United States. BS (Foreign Service), Georgetown University, the United States.

Executive Vice President and Chief Financial Officer, Macromedia, Inc. 1997–2005. Vice President, Corporate Development, Macromedia, Inc. 1996–1997. Various roles in Corporate Development and International Finance, Hewlett-Packard Company 1988–1996.

Chair of the Board of Directors of DAI. Independent Member of the Board of Directors and Chair of the Audit Committee of Upwork Inc.

Independent Member of the Board of Directors and Chair of the Audit Committee of Berkeley Lights, Inc.

Independent Lead Director and Chair of the Audit Committee of Zendesk Inc 2013–2019. Member of the Board of Directors of Pandora Media 2013–2017.

Søren Skou
b. 1964
CEO of A.P. Møller Mærsk A/S. Nokia Board member since 2019. Member of the Personnel Committee.

MBA (honours), IMD, Switzerland. Business Administration, Copenhagen Business School, Denmark. Maersk International Shipping Education (M.I.S.E.).

Maersk Line Copenhagen CEO 2012–2016. Maersk Tankers Copenhagen CEO 2001–2011. Maersk Tankers Copenhagen Head of Crude and Product 1999–2001. Maersk Line Copenhagen Head of Department 1997–1998. Maersk Line Beijing Operations Manager 1994–1996. Maersk Line Copenhagen and New Jersey, Charterer and other roles 1983–1994.

Member of International Council of Containership Operators (ICCO).

Carla Smits-Nusteling

b. 1966

Nokia Board member since 2016. Chair of the Audit Committee and member of the Corporate Governance and Nomination Committee.

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Master’s Degree in Business Economics, Erasmus University Rotterdam, the Netherlands. Executive Master of Finance and Control, Vrije University Amsterdam, the Netherlands.

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Member of the Board of Directors and Chief Financial Officer of KPN 2009–2012. Various financial positions in KPN 2000–2009. Various financial and operational positions in TNT/PTT Post 1990–2000.

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Member of the Supervisory Board since 2013 and Chair of the Audit Committee of ASML. Chair of the Board of Directors of TELE2 AB. Member of the Board of Directors, Chair of the Audit Committee and member of the Remuneration and Nomination Committee of Allegro.eu SA. Member of the Board of Directors of the Stichting Continuïteit Ahold Delhaize (SCAD) foundation. Lay Judge in the Enterprise Court of the Amsterdam Court of Appeal since 2015.

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Member of the Management Board of the Unilever Trust Office 2015-2019.

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Due to transitioning from one board to another, Carla Smits-Nusteling temporarily holds four audit committee positions in public companies, including Nokia. She recently joined the Board and Audit Committee of Allegro.eu SA while she will step down from the ASML Board and Audit Committee on April 29, 2021. As required under the NYSE corporate governance standards, the Board has determined that her ability to effectively serve on Nokia’s Audit Committee is not impaired due to this short period of serving on more than three audit committees of listed companies.

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Operations of the Board of Directors

The Board represents and is accountable to the shareholders of Nokia. While its ultimate statutory accountability is to the shareholders, the Board also takes into account the interests of the Company’s other stakeholders. The Board’s responsibilities are active, not passive, and include the responsibility to evaluate the strategic direction of Nokia, its management policies and the effectiveness of the implementation of such by the management on a regular basis. It is the responsibility of the members of the Board to act in good faith and with due care, so as to exercise their business judgement on an informed basis, in a manner that they reasonably and honestly believe to be in the best interests of Nokia and its shareholders. In discharging that obligation, the members of the Board must inform themselves of all relevant information reasonably available to them. The Board and each Board Committee also have the power to appoint independent legal, financial or other advisors as they deem necessary. The Company will provide sufficient funding to the Board and to each Committee to exercise their functions and provide compensation for the services of their advisors.

The Board is ultimately responsible for monitoring and reviewing Nokia’s financial reporting process, effectiveness of related control and audit functions and the independence of Nokia’s external auditor, as well as for monitoring the statutory audit of the annual and consolidated financial statements. The Board’s responsibilities also include overseeing the structure and composition of our top management and monitoring legal compliance and the management of risks related to our operations. In doing so, the Board may set annual ranges and/or individual limits for capital expenditures, investments and divestitures and financial and non-financial commitments that may not be exceeded without a separate Board approval.

In risk management policies and processes, the Board’s role includes risk analysis and assessment in connection with financial, strategy and business reviews, updates and decision-making proposals. Risk management policies and processes are integral parts of Board deliberations and risk-related updates are provided to the Board on a recurring basis. For a more detailed description of our risk management policies and processes, refer to “—Risk management, internal control and internal audit functions at Nokia—Main features of risk management systems” below.

Under our Corporate Governance Guidelines, the Board monitors the sustainability activities of the company, covering variety of environmental and social matters, and it periodically reviews the company’s related targets and performance. The Group Leadership Team decides on the environmental and social approach and key targets, and the key targets are incorporated into the ongoing performance management and related monthly business reviews of the business groups by the Group Leadership Team. In addition, the Board Committees monitor environmental and social developments in their respective areas of responsibilities, which in 2020 included for the Audit Committee the implementation planning of climate related financial reporting and reviewing the use of conflict minerals in the company’s products, Personnel Committee the incorporation of environmental and social targets in the incentive structures, and Corporate Governance and Nomination Committee the assessment of the environmental, social and governance (ESG) related governance trends. The business groups and other units are responsible for the implementation of the ESG policies and instructions to their operations.

The Board has the responsibility for appointing and discharging the President, the Chief Executive Officer, Chief Financial Officer and Chief Legal Officer. Since August 2020, Pekka Lundmark has served as the President and CEO. His rights and responsibilities include those allotted to the President under Finnish law and he also chairs the Group Leadership Team.

The Board approves and the independent directors of the Board confirm the compensation and terms of employment of the President and CEO, subject to the requirements of Finnish law, upon the recommendation of the Personnel Committee of the Board. The compensation and employment conditions of the other members of the Group Leadership Team are approved by the Personnel Committee upon the recommendation of the President and CEO.

Board evaluation

In line with our Corporate Governance Guidelines, the Board conducts an annual performance evaluation, which also includes evaluation of the Board Committees’ work, the Board and Committee Chairs and individual Board members. The Board evaluation is conducted as a self-evaluation while an external evaluator is periodically engaged. In 2020, the evaluation process included both numeric assessments and the possibility to provide more detailed written and verbal comments. Feedback is also requested from selected members of management as part of the Board evaluation process. Each year, the results of the evaluation are discussed and analyzed by the entire Board and improvement actions are agreed based on such discussion.

Meetings of the Board of Directors

The Board held 20 meetings excluding Committee meetings during 2020, of which approximately 60% were meetings in person/by video. In 2020, these meetings were mainly conducted by access via video as a consequence of travel restrictions in place due to the COVID-19 pandemic. The other meetings were held in writing.

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Directors’ attendance at the Board and Committee meetings in 2020 is set forth in the table below:

Additionally, many of the directors attended, as non-voting observers, meetings of a Committee of which they were not a member.

Directors meet without management in connection with each regularly scheduled meeting. According to Board practices, meetings without management present would only be attended by non-executive directors and be chaired by the non-executive Chair of the Board. If the non-executive Chair of the Board is unable to chair these meetings, the non-executive Vice Chair of the Board chairs the meeting. Additionally, the independent directors would meet separately at least once annually. In 2020, all members of the Board were non-executive and determined to be independent from Nokia and significant shareholders under the Finnish corporate governance standards and the rules of the NYSE.

In order to prevent the spread of the COVID-19 pandemic, the Board of Directors resolved pursuant to the temporary legislation approved by the Finnish Parliament on April 24, 2020 to hold the Annual General Meeting 2020 without the presence of shareholders, their proxy advisors, the Board and the management. Only the Chair of the Board Risto Siilasmaa was present in person to open the meeting.

Committees of the Board of Directors

The Board of Directors has four committees that assist the Board in its duties pursuant to their respective committee charters. The Board may also establish ad hoc committees for detailed reviews or consideration of particular topics to be proposed for the approval of the Board. Any director who so wishes may attend, as a non-voting observer, meetings of committees of which they are not members.

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The Audit Committee

The Committee consists of a minimum of three members of the Board who meet all applicable independence, financial literacy and other requirements as stipulated by Finnish law and the rules of Nasdaq Helsinki and the NYSE. From May 27, 2020, the Audit Committee has consisted of the following five members of the Board: Carla Smits-Nusteling (Chair), Thomas Dannenfeldt, Jeanette Horan, Edward Kozel and Elizabeth Nelson.

The Committee is responsible for assisting the Board in the oversight of:

In discharging its oversight role, the Audit Committee has full access to all company books, records, facilities and personnel. The Audit Committee also maintains procedures for the receipt, retention and treatment of complaints received by the company regarding accounting, internal controls, or auditing matters and for the confidential, anonymous submission by our employees of concerns relating to accounting or auditing matters. Nokia’s

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disclosure controls and procedures, which are reviewed by the Audit Committee and approved by the President and CEO and the Chief Financial Officer, as well as the internal controls over financial reporting, are designed to provide reasonable assurance regarding the quality and integrity of the company’s financial statements and related disclosures. For further information on internal control over financial reporting, refer to “Risk management, internal control and internal audit functions at Nokia–Description of internal control procedures in relation to the financial reporting process” below.

Under Finnish law, an external auditor is elected by a simple majority vote of the shareholders at the Annual General Meeting for one year at a time. The Audit Committee prepares the proposal to the shareholders, upon its evaluation of the qualifications and independence of the external auditor, of the nominee for election or re-election. Under Finnish law, the fees of the external auditor are also approved by the shareholders by a simple majority vote at the Annual General Meeting. The Committee prepares the proposal to the shareholders in respect of the fees of the external auditor, and approves the external auditor’s annual audit fees under the guidance given by the Annual General Meeting. For information about the fees paid to Nokia’s external auditor, Deloitte Oy, during 2020, refer to “Auditor fees and services” below.

The Board has determined that all members of the Audit Committee, including its Chair, Carla Smits-Nusteling, are “audit committee financial experts” as defined in the requirements of Item 16A of the Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission (SEC). Ms. Smits-Nusteling and each of the other members of the Audit Committee are “independent directors” as defined by Finnish law and Finnish Corporate Governance Code and in Section 303A.02 of the NYSE Listed Company Manual.

The Audit Committee meets a minimum of four times a year based on a schedule established at the first meeting following the appointment of the Committee. The Committee meets separately with the representatives of Nokia’s management, heads of the internal audit, and ethics and compliance functions, and the external auditor in connection with each regularly scheduled meeting. The head of the internal audit function has, at all times, direct access to the Audit Committee, without the involvement of management.

Audit Committee pre-approval policies and procedures

The Audit Committee of the Board is responsible, among other matters, for oversight of the external auditor’s independence, subject to the requirements of applicable legislation. The Audit Committee has adopted a policy regarding an approval procedure of audit services performed by the external auditors of Nokia Group and permissible non-audit services performed by the principal external auditor of the Nokia Group (the “Pre-approval Policy”).

Under the Pre-approval Policy, proposed services either: (i) may be pre-approved by the Audit Committee in accordance with certain service categories described in the Pre-approval Policy (general pre-approval); or (ii) require the specific pre-approval of the Audit Committee (specific pre-approval). The Pre-approval Policy sets out the audit, audit-related, tax and other services that have received the general pre-approval of the Audit Committee. All other audit, audit-related (including services related to internal controls and significant mergers and acquisitions projects), tax and other services are subject to specific pre-approval by the Audit Committee. All service requests concerning generally pre-approved services will be submitted to an appointed Audit Committee delegate within management, who will determine whether the services are within the services generally pre-approved. The Pre-approval Policy is subject to annual review by the Audit Committee.

The Audit Committee establishes budgeted fee levels annually for each of the categories of audit and non-audit services that are pre-approved under the Pre-approval Policy, namely, audit, audit-related, tax and other services. At each regular meeting of the Audit Committee, the auditor provides a report in order for the Audit Committee to review the services that the auditor is providing, as well as the cost of those services.

The Corporate Governance and Nomination Committee

The Committee consists of three to five members of the Board who meet all applicable independence requirements as stipulated by Finnish law and the rules of Nasdaq Helsinki and the NYSE. From May 27, 2020 the Corporate Governance and Nomination Committee has consisted of the following four members of the Board: Kari Stadigh (Chair), Sari Baldauf, Bruce Brown and Carla Smits-Nusteling.

The Committee fulfills its responsibilities by:

The Committee has the power and practice to appoint a recruitment firm to identify appropriate new director candidates.

The Personnel Committee

The Committee consists of a minimum of three members of the Board who meet all applicable independence requirements as stipulated by Finnish law and the rules of Nasdaq Helsinki and the NYSE. From May 27, 2020 the Personnel Committee has consisted of the following four members of the Board: Bruce Brown (Chair), Elizabeth Nelson, Søren Skou and Kari Stadigh.

The Committee has overall responsibility for evaluating, resolving and making recommendations to the Board regarding:

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The Committee is responsible for overseeing compensation philosophy and principles and ensuring the Company’s compensation programs are performance-based, and designed to contribute to long-term shareholder value creation and alignment to shareholders’ interests, properly motivate management, and support overall corporate strategies.

The Technology Committee

The Committee consists of a minimum of three members of the Board who meet applicable independence requirements as stipulated by Finnish law and the rules of Nasdaq Helsinki and the NYSE and have such skills in innovation, technology and science matters as the Board determines adequate from time to time. From May 27, 2020 the Technology Committee has consisted of the following five members of the Board: Edward Kozel (Chair), Sari Baldauf, Bruce Brown, Thomas Dannenfeldt and Jeanette Horan.

In its dialogue with and provision of opinions and advice to the management, the Committee will periodically review:

Group Leadership Team and the President and CEO

We have a Group Leadership Team that is responsible for the operative management of Nokia. The Board appoints the Chair of the Group Leadership team. The Group Leadership Team is chaired by the President and CEO. The President and CEO’s rights and responsibilities include those allotted to the President under Finnish law.

On December 31, 2020, the Group Leadership Team consisted of 17 members representing nine different nationalities and 24% of the members were female. On October 29, 2020, we announced changes to our operating model and resulting appointments to the Group Leadership Team taking effect on January 1, 2021. At present, our Group Leadership Team consists of 10 members, including the President and CEO, representing seven different nationalities and 20% of the members are female.

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(1)   As of January 1, 2021 Chief Customer Experience Officer.

(2)   As of January 1, 2021 President of Network Infrastructure.

(3)   As of January 1, 2021 President of Cloud and Networks Services.

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Biographical details of the current members of the Nokia Group Leadership Team

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Pekka Lundmark

b. 1963

President and Chief Executive Officer of Nokia Corporation as of August 1, 2020.

Master of Science, Department of Technical Physics, Helsinki University of Technology, Finland.

President and CEO, Fortum Corporation 2015-2020. President and CEO, Konecranes Plc 2005–2015 and Group Executive Vice President 2004–2005. President and CEO, Hackman Oyj Abp 2002–2004. Managing Partner, Startupfactory 2000–2002. Various executive positions at Nokia 1990–2000.

Commissioner, Broadband Commission for Sustainable Development. Member of the Board, Climate Leadership Council. Member of the Board, Research Institute of the Finnish Economy (ETLA) and Finnish Business and Policy Forum (EVA). International Member of the Academy, Royal Swedish Academy of Engineering Sciences (IVA). Member of the Board, Finnish Athletics Federation.

Chairman of the Board, Confederation of Finnish Industries, 2019–2020. Member of the Board, East Office of Finnish Industries, 2009–2020. Chairman of the Board, Finnish Energy, 2016–2018.

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Nassib Abou-Khalil

b. 1972

Chief Legal Officer (CLO). Group Leadership Team member since 2019. Joined Nokia in 2014.

Bachelor of Arts (Political Sciences), Civil Law (LL.L.), Common Law (LL.B.) and Master of Law (LL.M), University of Ottawa, Canada.

Deputy Chief Legal Officer, Business, Nokia 2019. General Counsel, Customer Operations, Nokia 2016–2019. Head of Legal & compliance, MEA, Nokia 2014–2015. Head of Public Policy, Europe, Middle East & Africa, and General Counsel, Middle East & Africa, Yahoo!, 2010–2014. Regional Counsel, Middle East & Africa and India, GE Oil & Gas, 2007–2010. Regulatory Counsel, Etisalat, 2006–2007. Various legal counsel roles, TMF Netherlands 2002–2006. Legal articling, Fasken Martineau 1999–2001.

Nishant Batra
b. 1978
Chief Strategy and Technology Officer (CSTO). Group Leadership Team member since 2021. Joined Nokia in 2021.

MBA from INSEAD. Master’s degree in Telecommunications and a master’s degree in Computer Science, Southern Methodist University, Dallas, US Bachelor’s degree in Computer Applications, Devi Ahilya University, India.

Previously Executive Vice President and Chief Technology Officer, Veoneer, Inc. 2018-2021. Prior to Veoneer Inc. held several senior positions at Ericsson for 12 years in the US, Sweden and India.

Independent member of the Board of Directors, Sensys Gatso Group.

Ricky Corker

b. 1967

Chief Customer Experience Officer (CCXO). Group Leadership Team member since 2019. Joined Nokia in 1993.

Bachelor in Communications and Electronic Engineering from the Royal Melbourne Institute of Technology, Australia.

President of Customer Operations, Americas, Nokia, 2019–2020. Executive Vice President and President of North America, Nokia, 2011–2018. Head of Asia Pacific, Nokia Siemens Networks, 2009–2011. Head of Asia North Region, Nokia Siemens Networks, 2008–2009. Head of Hutchison Global Customer Business Team, Nokia Siemens Networks, 2007–2008. Vice President Asia Pacific, Nokia Networks, 2005–2007. Lead Sales Director Asia Pacific, Nokia Networks, 2004–2005. Account Director Telstra, Nokia Networks, 2002–2003. Account Director Vodafone Australia and New Zealand, and Sales Director Vodafone Asia Pacific Customer Business Team, Nokia Networks, 2001–2002. Commercial Director Global Accounts British Telecom, Nokia Networks, 2001. Senior sales and marketing positions at Nokia, 1993–2001.

Federico Guillén

b. 1963

President of Network Infrastructure. Group Leadership Team member since 2016. Joined Nokia in 2016.

Degree in Telecommunications Engineering, ETSIT at Universidad Politécnica de Madrid, Spain. Master’s degree in Switching & Communication Architectures, ETSIT at Universidad Politécnica de Madrid, Spain. Master’s Degree in International Management, ESC Lyon and Alcatel, France.

President of Customer Operations, Europe, Middle East & Africa and Asia Pacific, Nokia, 2018–2020. President of Fixed Networks, Nokia, 2016–2018. President of Fixed Networks, Alcatel-Lucent, 2013–2016. President and Chief Senior Officer of Alcatel-Lucent Spain and Global Account Manager Telefónica, Alcatel-Lucent, 2009–2013. Vice President Sales of Vertical Market Sales in Western Europe, Alcatel-Lucent, 2009. Head of Regional Support Center, Fixed Access Division for South Europe, Middle East & Africa, India and Caribbean & Latin America, Alcatel-Lucent, 2007–2009. President and Chief Senior Officer, Alcatel Mexico and Global Account Manager, Telmex, 2003–2007. Various R&D, portfolio and sales management positions with Telettra in Spain, and then with Alcatel in Spain, Belgium and the United States 1989–2003.

Jenni Lukander

b. 1974

President of Nokia Technologies. Group Leadership Team member since 2019. Joined Nokia in 2007.

Master of Laws, University of Helsinki, Finland.

Senior Vice President, Head of Patent Business, Nokia 2018–2019. Vice President, Head of Patent Licensing, Nokia 2018. Vice President, Head of Litigation and Competition Law, Nokia 2016–2018. Director, Head of Regulatory and Competition Law, Nokia 2015–2016. Director, Head of Competition Law, Nokia 2011–2015. Senior Legal Counsel, Nokia 2007–2011. Visiting lawyer, Nokia, 2001. Lawyer, Roschier Ltd. 1999–2007.

Raghav Sahgal

b. 1962

President of Cloud and Network Services. Group Leadership Team member since 2020. Joined Nokia in 2017.

Master of Science in Computer Systems Management, University of Maryland, United States. Bachelor of Science in Computer Engineering, Tulane University, New Orleans, United States. Executive Business Certificate in General Management, Harvard University, United States.

President of Nokia Enterprise, 2020. Senior Vice President, Nokia Software, 2017–2020. President, NICE Ltd. Asia Pacific and the Middle East, 2010–2017. Advisory Board Member, Orga Systems, 2010–2014. Vice President, Communications Business Unit, Asia Pacific & Japan, Oracle, 2008–2010. Chief Business Officer, Comverse, 2005–2006. Executive Vice President, Asia Pacific, CSG, 2002–2005. Vice President, Software Products Group Asia Pacific, Lucent Technologies, 2000–2002.

Tommi Uitto

b. 1969

President of Mobile Networks. Group Leadership Team member since 2019. Joined Nokia in 1996.

Master’s degree in industrial management, Helsinki University of Technology, Finland. Master’s degree in operations management, Michigan Technological University, the United States.

Senior Vice President, Global Product Sales, Mobile Networks, Nokia 2016–2018. Senior Vice President, Global Mobile Broadband Sales, Customer Operations, Nokia Networks, 2015–2016. Senior Vice President, West Europe, Customer Operations, Nokia Networks, 2013–2015. Head of Radio Cluster (Senior Vice President), Mobile Broadband, Nokia Siemens Networks, 2012–2013. Head of Global LTE Radio Access Business Line (Vice President) and Quality, Mobile Broadband, Nokia Siemens Networks, 2011–2012. Head of Product Management, Network

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Systems, Nokia Siemens Networks, 2010. Head of Product Management, Radio Access, Nokia Siemens Networks, 2009. Head of WCDMA/HSPA and Radio Platforms Product Management, Nokia Siemens Networks, 2008. Head of WCDMA/HSPA Product Line Management, Nokia Siemens Networks, 2007. General Manager, Radio Controller Product Management, Nokia Networks, 2005–2007. Director, Sales & Marketing (Lead Sales Director), France Telecom/Orange Nokia Networks, 2002–2005. Operations Director, Northeast Europe, Central & Eastern Europe and Middle East, Nokia Networks, 1999–2002.

Stephanie Werner-Dietz

b. 1972
Chief People Officer (CPO). Group Leadership Team member since 2020. Joined Nokia in 1998.

Diploma in Applied business languages (Chinese) and International business studies, University of Applied Sciences, Bremen, Germany.

Vice President, Global HR Center of Expertise, Nokia, 2018–2019. Vice President, Business HR Head for Nokia Corporate Functions, Nokia, 2016–2018. Head of Business HR for Chief Finance and Operations Officer/Organization, Nokia, 2012–2015. Head of Nokia Siemens Networks Business Talent, Leadership & Organization Development, Nokia Siemens Networks, 2011–2012. Head of Business HR, Nokia Radio Access, 2007–2011. Head of HR Emerging Markets, Romania, Nokia, 2007. Senior HR Manager, Strategic Projects, US, Nokia, 2004–2006. HR Manager Global Platforms, Nokia, 2001–2004. HR Country Manager for the Philippines, Nokia, 1999–2001. HR Manager, Nokia Networks for Switzerland, Nokia, 1998–1999.

Marco Wirén
b. 1966

Chief Financial Officer (CFO). Group Leadership Team member since 2020. Joined Nokia in 2020.

Master’s degree in Business Administration, University of Uppsala. Studies in management and strategic leadership, including at Duke Business School, IMD, and Stockholm School of Economics.

President, Wärtsilä Energy and Executive Vice President, Wärtsilä Group, 2018–2020. Executive Vice President and CFO, Wärtsilä Group, 2013–2018. Executive Vice President and CFO, SSAB Group, 2008–2013. Vice President, Business Control, SSAB Group, 2007–2008. CFO, Eltel Networks, 2006–2007. Vice President of Business development, Eltel Networks, 2004–2005. Head of Service Division, Eltel Networks, 2003–2004. Vice President, Corporate Development, Eltel Networks, 2002–2003. Vice President, Strategy & Business Development, NCC Group, 1999–2002. Head of Strategic Planning, NCC Group, 1998–1999. Group Controller, NCC Group, 1996–1998.

Vice Chair of the Board of Directors and Chair of the Audit Committee, Neste Corporation.

Summary of changes in the Group Leadership Team in 2020 and thereafter

During 2020 and thereafter, the following new appointments were made to the Group Leadership Team:

During 2020, the following members of the Group Leadership Team stepped down from the Group Leadership Team:

Furthermore, the following changes took place within the Group Leadership Team:

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Risk management, internal control and internal audit functions at Nokia

Main features of risk management systems

We have a systematic and structured approach to risk management. Key risks and opportunities are primarily identified against business targets either in business operations or as an integral part of strategy and financial planning. Risk management covers strategic, operational, financial, compliance and hazard risks. Key risks and opportunities are analyzed, managed and monitored as part of business performance management with the support of risk management personnel and the centralized Enterprise Risk Management function.

The principles documented in the Nokia Enterprise Risk Management Policy, which is approved by the Audit Committee of the Board, require risk management and its elements to be integrated into key processes. One of the core principles is that the business or function head is also the risk owner, although all employees are responsible for identifying, analyzing and managing risks, as appropriate, given their roles and duties. Our overall risk management concept is based on managing the key risks that would prevent us from meeting our objectives, rather than solely focusing on eliminating risks. In addition to the principles defined in the Nokia Enterprise Risk Management Policy, other key policies reflect implementation of specific aspects of risk management.

Key risks and opportunities are reviewed by the Group Leadership Team and the Board in order to create visibility on business risks as well as to enable prioritization of risk management activities. Overseeing risk is an integral part of the Board’s deliberations. The Board’s Audit Committee is responsible for, among other matters, risk management relating to the financial reporting process and assisting the Board’s oversight of the risk management function. The Board’s role in overseeing risk includes risk analysis and assessment in connection with financial, strategy and business reviews, updates and decision-making proposals.

Description of internal control procedures in relation to the financial reporting process

The management is responsible for establishing and maintaining adequate internal control over financial reporting for Nokia. Our internal control over financial reporting is designed to provide reasonable assurance to the management and the Board regarding the reliability of financial reporting and the preparation and fair presentation of published financial statements.

The management conducts a yearly assessment of Nokia’s internal controls over financial reporting in accordance with the Committee of Sponsoring Organizations framework (the “COSO framework”, 2013) and the Control Objectives for Information and Related Technology (COBIT) framework of internal controls. The assessment is performed based on a top-down risk assessment of our financial statements covering significant accounts, processes and locations, corporate-level controls and information systems’ general controls.

As part of its assessment, the management has documented:

Further, the management has also:

In 2020, Nokia has followed the procedures as described above and has reported on the progress and assessments to the management and to the Audit Committee of the Board on a quarterly basis.

Description of the organization of the internal audit function

We also have an internal audit function that acts as an independent appraisal function by examining and evaluating the adequacy and effectiveness of our system of internal control. Internal audit reports to the Audit Committee of the Board. The head of the internal audit function has direct access to the Audit Committee, without involvement of the management. The internal audit staffing levels and annual budget are approved by the Audit Committee. All authority of the internal audit function is derived from the Board. The internal audit aligns to the business regionally and by business and function.

Annually, an internal audit plan is developed with input from the management, including key business risks and external factors. This plan is approved by the Audit Committee. Audits are completed across the business focused on site level, customer level, business project level, IT system implementation, IT security, operations activities or at a Group function level. The results of each audit are reported to the management identifying issues, financial impact, if any, and the correcting actions to be completed. Quarterly, the internal audit function communicates the progress of the internal audit plan completion, including the results of the closed audits, to the Audit Committee.

Internal audit also works closely with our Ethics and Compliance office to review any financial concerns brought to light from various channels and, where relevant, works with Enterprise Risk Management to ensure priority risk areas are reviewed through audits.

In 2020, the internal audit plan was completed and all results of these reviews were reported to the management and to the Audit Committee.

Related party transactions

We determine and monitor related parties in accordance with the International Accounting Standards (IAS 24) and other applicable regulations. We maintain information of our related parties as well as monitor and assess related party transactions. As a main principle, all transactions are conducted at arm’s-length and are considered to be part of the ordinary course of business. In an exceptional case where these principles would be deviated from, the company would set up a separate process to determine related parties and seek relevant approvals in accordance with internal guidelines and applicable regulations.

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Main procedures relating to insider administration

Our insider administration is organized according to the applicable European Union and Finnish laws and regulations. In addition, the Board of Directors has approved the Nokia Insider Policy, which sets out Nokia-wide rules and practices to ensure full compliance with applicable rules and that inside information is recognized and treated in an appropriate manner and with the highest integrity. The Nokia Insider Policy is applicable to all directors, executives and employees of the company.

Persons discharging managerial responsibilities

Nokia has identified members of the Board of Directors and the Group Leadership Team as persons discharging managerial responsibilities who, along with persons closely associated with them, are required to notify Nokia and the Finnish Financial Supervisory Authority of their transactions with Nokia’s financial instruments. Nokia publishes the transaction notifications.

In addition, under the Nokia Insider Policy, persons discharging managerial responsibilities are obligated to clear with the Deputy Chief Legal Officer, Corporate, a planned transaction in Nokia’s financial instruments in advance. It is also recommended that trading and other transactions in Nokia’s financial instruments are carried out in times when the information available to the market is as complete as possible.

Closed window

Persons discharging managerial responsibilities are subject to a closed window period of 30 calendar days preceding the disclosure of Nokia’s quarterly or annual result announcements, as well as the day of the disclosure. During the closed window period, persons discharging managerial responsibilities are prohibited from dealing in Nokia’s financial instruments.

Nokia has imposed this closed window period also on separately designated financial reporting persons who are recurrently involved with the preparation of Nokia’s quarterly and annual results announcements. These persons are separately notified of their status as designated financial reporting persons.

Insider registers

Nokia does not maintain a permanent insider register. Insiders are identified on a case-by-case basis for specific projects and are notified of their insider status. Persons included in a project-specific insider register are prohibited from dealing in Nokia’s financial instruments until the project ends or is made public.

Supervision

Our insider administration’s responsibilities include internal communications related to insider matters and trading restrictions, setting up and maintaining our insider registers, arranging related trainings as well as organizing and overseeing compliance with the insider rules.

Violations of the Nokia Insider Policy must be reported to the Deputy Chief Legal Officer, Corporate. Nokia employees may also use channels stated in the Nokia Code of Conduct for reporting incidents involving alleged violations of the Nokia Insider Policy.

Share ownership of the Board of Directors and the Nokia Group Leadership Team

The following table sets forth the number of shares and American Depositary Shares (ADS) held by the members of the Board at December 31, 2020 when they held a total of 1 033 100 shares and ADSs in Nokia, which represented approximately 0.02% of our total shares and voting rights excluding shares held by Nokia Group.

(1)   The number of shares or ADSs includes shares and ADSs received as director compensation as well as shares and ADSs acquired through other means. Stock options or other equity awards that are deemed as being beneficially owned under the applicable SEC rules are not included.

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The following table sets forth the number of shares and ADSs held by the President and CEO and the other members of the Group Leadership Team in office at December 31, 2020 when they held a total of 3 446 939 shares and ADSs in Nokia, which represented approximately 0.06% of our total shares and voting rights excluding shares held by Nokia Group.

(1)   The number of shares or ADSs includes shares and ADSs received as compensation as well as shares and ADSs acquired through other means. Stock options or other equity awards that are deemed as being beneficially owned under the applicable SEC rules are not included.

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Auditor fees and services

Deloitte Oy served as our auditor for the period ending December 31, 2020 and PricewaterhouseCoopers Oy for the period from January 1 to December 31, 2019. The auditor is elected annually by our shareholders at the Annual General Meeting for the financial year commencing next after the election. The Audit Committee of the Board prepares the proposal to the shareholders in respect of the appointment of the auditor based upon its evaluation of the qualifications and independence of the auditor to be proposed for election or re-election on an annual basis.

The following table presents fees by type paid to Deloitte’s (2020) and PricewaterhouseCoopers’ (2019) network of firms for the years ended December 31:

(1)   Audit fees consist of fees incurred for the annual audit of the Group’s consolidated financial statements and the statutory financial statements of the Group’s subsidiaries.

(2)   Audit-related fees consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of the Group’s financial statements or that are traditionally performed by the independent auditor, and include consultations concerning financial accounting and reporting standards; advice and assistance in connection with local statutory accounting requirements; due diligence related to mergers and acquisitions; and audit procedures in connection with investigations in the pre-litigation phase and compliance programs. They also include fees billed for other audit services, which are those services that only the independent auditor can reasonably provide, and include the provision of comfort letters and consents in connection with statutory and regulatory filings and the review of documents filed with the SEC and other capital markets or local financial reporting regulatory bodies.

(3)   Tax fees include fees billed for: (i) services related to tax compliance including preparation and/or review of tax returns, preparation, review and/or filing of various certificates and forms and consultation regarding tax returns and assistance with revenue authority queries; compliance reviews, advice and assistance on other indirect taxes; and transaction cost analysis; (ii) service related to tax audits; (iii) services related to individual compliance (preparation of individual tax returns and registrations for employees (non-executives), assistance with applying visa, residency, work permits and tax status for expatriates); (iv) services related to technical guidance on tax matters; (v) services related to transfer pricing advice and assistance with tax clearances; and (vi) tax consultation and planning (advice on stock-based remuneration, local employer tax laws, social security laws, employment laws and compensation programs and tax implications on short-term international transfers).

(4)   Other fees include fees billed for company establishments; liquidations; forensic accounting, data security, other consulting services and reference materials and services.

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