Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V)’s CEO Stephen Elop took a 45 percent pay cut in 2012 as the company faced a loss in the smart phone market to its rivals, Apple and Samsung.
The news came to light in a Securities and Exchange Commission filing which disclosed that Elop earned €4.33 million in 2012, down from 2011’s €7.94 million. His 2012 base salary did jump €59,500 to €1.08 million while his stock and option awards dropped; he did not get a bonus as Nokia did not meet some financial targets.
ValueWalk's Raul Panganiban interviews JP Lee, Product Managers at VanEck, and discusses the video gaming industry. Q4 2020 hedge fund letters, conferences and more The following is a computer generated transcript and may contain some errors. Interview With VanEck's JP Lee ValueWalk's ValueTalks ·
The executive joined Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) in 2010 from Microsoft Corporation (NASDAQ:MSFT). He was tasked with turning things around in the technology group. He utilized Windows 8 phone platform to assist with this and it hasn’t really made an impact yet.
Along with information about Elop’s salary information, the regulatory filing shed some light in the Nokia and Microsoft Corporation (NASDAQ:MSFT) business arrangement.
According to The Financial Times, Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) has to make $500 million net payments to Microsoft from using its Windows operating system as stipulated in a 2011 agreement. How long this lasts hasn’t been disclosed but the deal had been implemented to give both companies some much-needed life in the growing and competitive smartphone marketplace.
The terms of the agreement has Nokia paying for software royalties via the use of Microsoft’s platform. The U.S. company will incur payments for platform support.
In addition, Nokia’s payments have been estimated to “slightly exceed” Microsoft’s through the course of their deal.
On Thursday, Nokia said it will receive greater payments from Microsoft than it pays to company in 2013 but in 2014, it will become a net payer in royalties, reported FOX Business.
The company also said Microsoft payments will be greater than what it gets from the software company by approximately €0.5 billion ($650 million) over the course of the deal.
In the last 18 months, Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) has faced cash problems. In January when it announced its fourth quarter earnings, it showed a €800 million jump in net cash to €4.4 billion during the quarter but analysts warned that future payments to Microsoft would weigh on the figure.
The company also announced at that time, it had slashed its dividend–a first for the 148-year-old company.
Fortunately for Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V), the Windows phones have been gaining a little steam lately but it still lags behind its competition and with the entry of the BlackBerry 10 in the market, it won’t necessarily help things.
Ben Wood, a CCS Insight analyst, recent said via The Financial Times, “Given Microsoft’s muted support at recent major events such as CES and MWC, Nokia needs every penny of support it can get to fund its development program and the promotion of the Windows phone platform.”