mannerisms

Ruminations on the electronics industry from David Manners, Senior Components Editor on Electronics Weekly.

Elop Pay-off Threatens Finland’s Social Harmony

The $25 million (€18.8 million) payout to Nokia CEO Stephen Elop “may be a threat to social harmony,” says Finland’s finance minister Jutta Urpilainen.

There is widespread anger in the country over what has happened to Nokia since Elop took over and the proposed mega pay-out to him.

Nokia’s market cap has fallen by €19 billion during Elop’s tenure. Now, following the proposed sale of the handset business to Microsoft, he’s to get €18.8 million.

“It is quite outrageous,” says Finland’s Prime Minister, Jyrki Katsinen, “”the practices of rewards by large corporations all over the world are so exceptional that they cannot be understood with common sense.”

“It really is appalling,” said Timo Soini, head of the main opposition True Finns party, “most definitely people are angry.”

The Mayor of Oulu, where Nokia has a large part of its business said: “In Finnish behaviour such huge bonuses are unacceptable.”

Next month Nokia shareholders are to vote on the deal to sell Nokia’s handset business to Microsoft and, in a statement to the shareholders ahead of the meting, Elop’s pay-off is explained.

‘Mr. Elop will be entitled to receive 18 months of his base salary and management short-term cash incentive (calculated at 100% of target) as well as accelerated vesting of his outstanding equity awards.’

It goes on to say that the compensation payments: ‘Are estimated to be approximately EUR 18.8 million in the aggregate. This amount includes: base salary and management incentive EUR 4.1 million, value of benefits EUR 0.1 million and pro forma value of equity awards EUR 14.6 million.’

30% of the amount (EUR 5.65 million) will be borne by Nokia and the remaining 70% of the amount (EUR 13.17 million) will be borne by Microsoft.

The payout has sparked speculation that Elop’s employment contract was skewed to reward a sale of the company

Recently it was revealed that the CEO of Blackberry, Thorsten Heins, had contractual terms which meant he received $55 million if he sold the company.

Tags: base salary, cash incentive, compensation payments, finance minister, target

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5 Comments

  1. Anders
    September 24, 2013 15:15

    Keith; in fact a law is being proposed in Finland that the compensation for the top management should be decided by the shareholders’ meeting, not by the board.

  2. Lefty Goldblatt
    September 24, 2013 12:22

    Maybe without Elop their market cap would have fallen more that €19 billion?

    Sometimes these fellas are just Gilding the Turd .

  3. david manners
    September 24, 2013 14:48

    It seems you’re right, Lefty, Apple have just shown that all you need to do is produce a gold phone.

  4. Keith
    September 23, 2013 17:38

    Well before the Finns start moaning they ought to ask themselves who asked Elop to join Nokia? Who agreed his terms & conditions? I bet the Finns will not either prosecute the person responsible ( because they probably can’t ) or enact laws to prevent such a thing happening in future ( because they probably won’t ).

    Read ‘Confessions of an Economic Hit Man’ and you’ll see this has been going on for ages.

  5. david manners
    September 23, 2013 19:40

    Well in retrospect it all looks like a bit of a stitch up doesn’t it? NOK shareholders panic as NOK nosedives, MS says why not have one of our chaps to sort it out, the MS chap puts the MS mobile OS in NOK phones, then MS buys NOK while paying for 70% of their man’s leaving pay-out from NOK and then their guy trots off back to MS. I’d say it’s all a bit whiffy

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