Report: Nokia asked Stephen Elop to reduce his bonus but he refused

The upcoming sale of Nokia's Devices and Services division to Microsoft resulted in Stephen Elop resigning as Nokia's CEO. A few days later, it was revealed that Elop would be getting a severance package from Nokia that will be worth $25.5 million when the deal with Microsoft is closed in the first quarter of 2014.

That large amount of money, which in some circles is called a "golden parachute" has since generated a ton of negative press for Nokia in their home country of Finland. Matters got even worse when it was revealed this week that Elop's severance contract was very different than what other former Nokia CEOs have received in the past, despite what the company's chairman Risto Siilasmaa told the press last week. Elop will return to Microsoft, where he led Office development prior to being named Nokia's chief executive, when the deal completes.

Now a new report from Finland's Helsingin Sanomat claims, via unnamed sources, that Nokia's board has been urging Elop to accept a smaller amount for his severance package in an effort to stop the growing amount of hate towards the company. The report claims that Elop has refused that request. Apparently, Elop is getting a divorce from his current wife and he has told Nokia's board his wife would not accept a reduced payout.

This new wrinkle in the Nokia-Microsoft deal shows that the sale of Nokia's smartphone division has hit its home country hard. It's been a matter of national pride in Finland that Nokia was once the leader in mobile phone sales and technology and with that part of the business now being bought by Microsoft, there's been a sense of betrayal felt by many Finland citizens toward Nokia in general, and Elop in particular.

Source Helsingin Sanomat via BGR | Image via Nokia

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54 Comments

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You really can't blame the guy for getting and accepting his "bonus." I'm pretty sure that 99% of the people criticizing him would take the money with open arms if they had the chance to do so.

Elop didn't kill Nokia's phone business, the seed was planted long before he got around by stubborn asses (Finnish leaders who refused to listen to markets). The whole thing has just blown out of proportions. It's how the system works, so suck it up!

And yes, I'm a Finn and still in very much love with Microsoft!

sbasil said,
I'm pretty sure that 99% of the people criticizing him would take the money with open arms if they had the chance to do so.

Exactly! If that's the severance package they had in place for him, why should he accept less? I wouldn't. And honestly, for big companies like Nokia, they can probably find that in the cushions of their couches. According to Wikipedia, Nokia's annual revenue is about €30 billion.

Edited by COKid, Sep 27 2013, 12:24am :

Tell the wife if she talks the 25M, she doesn't get a penny more. How coincidental she wants a divorce now that he is getting paid. Typical gold digging...

Elop, for 1/25th of that money, I will make her go away...lol

>It's been a matter of national pride in Finland that Nokia was once the leader in mobile phone sales and technology and with that part of the business now being bought by Microsoft, there's been a sense of betrayal felt by many Finland citizens toward Nokia in general, and Elop in particular.

May be they should suck up their pride and admit it is Nokia itself who is responsible for everything when they failed with Symbian, meego, maemo. These happened before Elop. Blaming him is like making a big hole in the ship, assigning a new captain and then blaming the new captain for not being able to keep the ship afloat *AND* reach the destination too!

the finns should be grateful that under elop,microsoft kept the company alive with its support payments,or nokia would have ceased to exist a long time ago from the previous leadership that destroyed the company. at least now they have a network infrastructure company.

I call BS and tabloid behavior. The 'unnamed sources' part would be a huge giveaway here..

There is really nothing special going on here and people who are looking to hurt Nokia and the upcoming vote seem to be hell bent on spinning/twisting whatever

paulheu said,
I call BS and tabloid behavior. The 'unnamed sources' part would be a huge giveaway here..

There is really nothing special going on here and people who are looking to hurt Nokia and the upcoming vote seem to be hell bent on spinning/twisting whatever


There might be nothing special for CEO' s contracts in the US, Carly Fiorina golden parachute being a perfect example of out of control the situation is, but Nokia is an European company; things are different there.

The reason why he got all this money is because he did a standard US CEO contract . There are things in a US company CEO contract that are not in standard Finish Ceo contracts. HE did nothing out of the ordinary if you compare him to A US CEO. People are not taking that into account.

Then why did Nokia agree with such bonus decision in the first time?
Begging later on for mercy showing that Nokia has no pride.

Color me unsurprised.
That said a contract is a contract, too bad Nokia you agreed to it now pay the man his money. Also that he's in the middle of a divorce can matter (not that he really should bring that up a public reason\excuse), a court *could find him liable to the wife for the difference if agreed arbitrarily to a lower figure, it wouldn't be fair but it wouldn't be the first time someone got screwed like that in a divorce case either, I agree with Elop it's not in any way in his interest to agree to a lower figure.

one thing is certain. nokia's going to be the laughing stock of the mobile tech world for a long, long time to come.

Nokia shouldn't have offered him that amount of compensation in the first place.trying to get Elop to change what they originally offered him is wrong as well..they are just going to have to take it from the public and the press in Finland.

dvb2000 said,
What a surprise, American (greed is good) CEO has given himself $25m before defecting back to the good ol USA mothership.

Well, you've got to reward CEOs that lose you market share, burn up all your cash reserves, get your stock downgraded to "junk" by analysts and then sell you out to their former employer.

John Callaham said,
Nokia shouldn't have offered him that amount of compensation in the first place.trying to get Elop to change what they originally offered him is wrong as well..they are just going to have to take it from the public and the press in Finland.

They should have tied his financial compensation to the performance of the company, as then he'd be paying them.

theyarecomingforyou said,

Well, you've got to reward CEOs that lose you market share, burn up all your cash reserves, get your stock downgraded to "junk" by analysts and then sell you out to their former employer.

Well perhaps Nokia should have considered those factors before agreeing to the figure in the first place.

theyarecomingforyou said,
Yeah, it seems pretty preposterous.

Not that preposterous (see further comment below), that said if I were him I wouldn't have put it out there in the public domain even if it was a legit concern of his.

theyarecomingforyou said,

They should have tied his financial compensation to the performance of the company, as then he'd be paying them.

I agree but - Should have... Could have... Would have.... didn't.

knighthawk said,
Well perhaps Nokia should have considered those factors before agreeing to the figure in the first place.

And perhaps Elop shouldn't have run the company into the ground. The entire system of CEO pay is completely out of control and isn't proportional to the value they provide to the company. Elop was wrong to demand so much and Nokia was wrong to accept it. There's plenty of blame to go around.

Arstechnica stated ELops contract was standard for a US CEO. Finish CEOS do not have certain things in their contracts that US CEOS do. ELOP didn't fleece Nokia.

No there really isn't the board could have told him no, they could have not hired him in the first place but that's all beside the point. They didn't, what they did do is give him golden parachute of certain amount and now are trying to back out of it, something they can't do and know it which is why they wanted this leaked out to so how many Elop take the heat instead of the board itself.

majortom1981 said,
Arstechnica stated ELops contract was standard for a US CEO. Finish CEOS do not have certain things in their contracts that US CEOS do. ELOP didn't fleece Nokia.

You say that as if people don't complain about US contracts and that people think they're completely reasonable.

theyarecomingforyou said,

Well, you've got to reward CEOs that lose you market share, burn up all your cash reserves, get your stock downgraded to "junk" by analysts and then sell you out to their former employer.

Personally, I think the whole thing stinks to high heaven of fraud, and needs to be investigated by the authorities.

FloatingFatMan said,
Personally, I think the whole thing stinks to high heaven of fraud, and needs to be investigated by the authorities.

Yeah. Hiring a former Microsoft executive, going WP-exclusive, burning through cash reserves, making expensive purchases (e.g. Siemens buyout) and then waiting to be bought up by Microsoft doesn't sit well with me, especially not with him receiving a major payout from Nokia and a high-level executive position back at Microsoft. Dodgy stuff.

Shadowzz said,
Except that Nokia was bleeding to death before Elop came around and turned Nokia back into the positive numbers again.

No, he didn't. Nokia's stock was downgraded under Elop's leadership, with the company posting a $150m loss in Q2 2013 and experiencing a 27% decline in handset shipments. The only profit the company posted was at the beginning of the year when the dividend was scrapped, which was short-lived and required manipulation to achieve.

Yeah stock, I don't care for stock market, its all selling air and based on gut feelings.

Nokia was bleeding, they were losing their entire global market to everyone else.
Nokia was running straight for a complete collapse...

Shadowzz said,
Yeah stock, I don't care for stock market, its all selling air and based on gut feelings.

The stock price reflects the performance of the company and is based on a lot more than just "gut feelings". Even if we ignore that, Nokia lost billions of dollars and most of its market share under Elop's leadership. Sure, Nokia's demise was probably inevitable given the company's years of mismanagement but Elop was only looking out for himself - he lined the company up for acquisition by his former employer and negotiated a massive payoff for the effort.

theyarecomingforyou said,

Well, you've got to reward CEOs that lose you market share, burn up all your cash reserves, get your stock downgraded to "junk" by analysts and then sell you out to their former employer.


Nokia was already shrinking before Elop took over so was the stock. From how I see it Nokia was beginning to go up again as a brand. It has now become number 2 in many markets in a year with WP. I can't understand why people can't see this.

John Callaham said,
Nokia shouldn't have offered him that amount of compensation in the first place.trying to get Elop to change what they originally offered him is wrong as well..they are just going to have to take it from the public and the press in Finland.

The issue is different: the clause that would allow Elop to receive this hefty paycheck was based on a “change of control” of the company. Now MS did not buy Nokia in its entirety; Nokia sold a division of the company to MS. It will be interesting to see how things wil develop.

duk3togo said,
From how I see it Nokia was beginning to go up again as a brand. It has now become number 2 in many markets in a year with WP. I can't understand why people can't see this.

The problem is that most of those sales are for entry-level models, which aren't as profitable as flagship handsets like the Galaxy S4 or the iPhone. Nokia used to be the market leader and now it's having to compete for the scraps that its competitors aren't interested in.

dvb2000 said,
What a surprise, American (greed is good) CEO has given himself $25m before defecting back to the good ol USA mothership.

How is this "American (greed is good) CEO" since he's Canadian, and Nokia is technically Finnish?

xendrome said,
How is this "American (greed is good) CEO" since he's Canadian, and Nokia is technically Finnish?

I think it's because the contract was based on US contracts and because he was a major executive at Microsoft (and will be again).

dvb2000 said,
What a surprise, American (greed is good) CEO has given himself $25m before defecting back to the good ol USA mothership.

He didn't give it to himself... LOL

And the whole story sounds bizarre and fictitious to begin with... LOL

theyarecomingforyou said,

The problem is that most of those sales are for entry-level models, which aren't as profitable as flagship handsets like the Galaxy S4 or the iPhone. Nokia used to be the market leader and now it's having to compete for the scraps that its competitors aren't interested in.

But again, that was the position Nokia was in before he stepped in... All things considered, Nokia was in a much stronger position than they were prior to Elop...

M_Lyons10 said,
But again, that was the position Nokia was in before he stepped in... All things considered, Nokia was in a much stronger position than they were prior to Elop...

How is Nokia in a better position? Microsoft bought out the devices and services businesses, leaving the company a shell of its former self. Elop and Microsoft are the biggest beneficiaries.

John Callaham said,
Nokia shouldn't have offered him that amount of compensation in the first place.

People have to keep in mind NOkia is not a private company. I agree that private companies can do what they want with their money. But we are talking about a company listed on the stock exchange.

Who the ---- do you think you are, telling someone what they should make, what bonus they deserve, or what their severance package should be? I bet it would feel different if a bunch of folks on Internet weighed in on how much they think YOU deserve. My guess is it's probably less than you get today.

Skwerl said,
Who the ---- do you think you are, telling someone what they should make, what bonus they deserve, or what their severance package should be? I bet it would feel different if a bunch of folks on Internet weighed in on how much they think YOU deserve. My guess is it's probably less than you get today.

That's what happens when you have a high-profile job and are beholden to shareholders and board members.