Stephen Elop, the former CEO of Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V), and who will be returning to Microsoft Corporation (NASDAQ:MSFT), will receive a total compensation of approximately €18.8 million from both companies.
Elop to return to Microsoft as vice president of Devices & Services unit
Elop entered an agreement with Nokia Corporation amending his service contract with Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) after the company agreed to sell its Devices and Services business to Microsoft Corporation (NASDAQ:MSFT) for €5.44 billion. As part of the transaction, Elop will no longer serve as president and CEO of the Finnish smartphone manufacturer. He will return to Microsoft to serve as executive vice president of the Devices & Services unit.
Based on the proxy filing of the Finnish smartphone manufacturer, Elop’s proposed €18.8 million compensation is comprised of €4.1million base salary and management incentive, €0.1 million value of benefits, and €14.6 million pro forma value of equity awards.
Nokia will pay 30 percent, while Microsoft will pay 70 percent
Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) will pay 30 percent, or €5.65 million, while the remaining 70 percent, or €12.7 million, will be borne by Microsoft Corporation (NASDAQ:MSFT) based on the amended service contract.
Under Elop’s new service contract, he is entitled to receive payment of 18 months of his base salary and management short-term cash incentive. He is also entitled to receive accelerated vesting of his outstanding equity awards.
Competition restriction to be waived in this case
Elop is restricted to work for certain competitors specified by the Finnish smartphone manufacturer. The restriction will be waived for Microsoft Corporation (NASDAQ:MSFT) after the closing of the acquisition of the Devices & Services business.
Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) will hold a general meeting for the approval of its agreement to sell its mobile phone business to Microsoft Corporation (NASDAQ:MSFT) on November 19.
Did Elop have a conflict of interest?
A related report from Ft.com indicated that some people in Finland think that Elop had a conflict of interest in selling the mobile phone business of Nokia to Microsoft. There were also complaints that the acquisition price was too low.
A financial familiar with the Finnish smartphone manufacturer commented, “The price suggests that either Nokia is in a worse state than the market has been told or it’s just a bad deal. Why else would Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) sell at such a low point? Nokia has lost.”
On the other hand, Jan Vapaavuori, Minister of Economy in Finland said, “I find it difficult to understand the merits of this bonus.”