A Finnish newspaper has uncovered information in the SEC filings for Nokia's sale to Microsoft that show former Nokia CEO Stephen Elop had a huge incentive to unload the company in the form of a $25.5 million US bonus that he would get in the event of a "change of control" in the mobile company.
Elop, a Canadian, had the terms of the bonus written into in his contract, U.S. Securities and Exchange Commission filings examined by the Finnish newspaper Helsingin Sanomat show.
The formerly secret bonus terms have caused a furore in Finland, where many take great national pride in Nokia's success and pioneering role in the wireless industry. Investors, politicians and the public have all expressed concern over the sale of Nokia's smartphone division to Microsoft.
Elop was a former chief of Microsoft's business division before leaving for Nokia in 2010. He presided over the 5.4-billion euro ($7.6-billion Cdn) deal to sell Nokia to Microsoft.
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Bonus downplayed by Nokia executive
Nokia's chairman of the board, Risto Siilasmaa, had previously told the Finnish press that Elop's compensation package was similar to that of his predecessor, Olli-Pekka Kallasvuo, who got about $5 million US when he was fired three years ago.
But when Finnish media looked into the SEC filings for the deal, they found that Elop would get all his stock incentives at once if the company were sold.
The Helsingin Sanomat newspaper revealed the findings Tuesday, and by Wednesday, Nokia was reportedly asking Elop to accept a smaller bonus. According to the technology news website BGR, Helsingin Sanomat reported on Wednesday that the company was pleading with Elop to take a cut in his promised bonus in order to quell the public outcry over the large payment.
The outcry in Finland, has, indeed, been loud, with the prime minister and other politicians weighing in.
The Financial Times reported that Finnish prime minister Jyrki Katainen called the payment "outrageous" and said, "apparently, the practices of rewards by large corporations all over the world are so exceptional that they cannot be understood with common sense."
The paper also quoted Jutta Urpilainen, the centre-left finance minister, as saying the large payday had created "a general toxic atmosphere" that "may be a threat to social harmony."
BlackBerry CEO may get big payout
It's not unusual for CEOs to get a large golden parachute if their companies are sold. BlackBerry CEO Thorsten Heins is eligible for as much as $55.6 million in the event he is ousted after a sale of the company. Fairfax Holdings said Monday it plans to buy BlackBerry if it secures the necessary financing.
Heins's compensation would be much more modest — about $22 million — if he is forced to step down without the company changing hands.
According to the SEC filing, Elop gets a "management short-term cash incentive," valued at $5.7 million and share awards of about $19.7 million.
He also rejoins Microsoft as executive vice-president for devices and services, a position that will see him presiding over the integration of Nokia's patents and services into Microsoft's realm.
Finnish investors accused Elop of being a plant for Microsoft during his tenure as Nokia CEO, especially when he helped choose its Windows Phone as the new Nokia operating system.