Did Nokia pay former CEO to sabotage share price for Microsoft takeover? Maybe not intentionally, but it’s come to light thanks to an article in Finland’s largest newspaper, Helsingin Sanomat, yesterday that Nokia boss and ex-Microsoft employee Stephen Elop’s contract had a hitherto unspotted clause that will reward him $25 million bonus for selling the handset division to his former employer.
Microsoft recently agreed to purchase Nokia’s phone business for $7.2bn (R71bn), and Elop has been widely tipped as a prospective replacement for outgoing MS chief Steve Ballmer.
The Sanomat’s revelations have led to a massive outcry among Finns, for whom Nokia’s success has long been a matter of national pride. Under Elop, the firm focused exclusively on Windows Phone operating systems for its high end smartphones, abandoning previous developments around Android. Under his watch, the firm’s marketshare and share price collapsed. Over 40% of all mobile phones sold in 2007 were made by Nokia: today that figure is just 15%. At the start of the century, Nokia did more than anyone to introduce the world to the concept of the smartphone: now it commands just 3% of the market.
This morning the paper is reporting that the Nokia board is pleading with Elop to reconsider his terms and accept less money for the deal.
While the details of Elop’s bonus were in the public domain as part of the firm’s mandatory SEC filings, they hadn’t been spotted until Sanomat began digging. To make things worse, current acting CEO of Nokia Risto Siilasmaa – who took over from Elop when the Microsoft purchase was announced – said last week that Elop’s contract was “essentially the same” as the one the previous CEO had been given when in fact his contract stipulated a massive share awards bonus worth $19.7 million in case of a “change of control” that was not present in any other Nokia CEO’s contract in addition to a Nokia-standard 18 months of his salary and a “management short term cash incentive” worth $5.7 million. The deal Elop signed up for seems almost designed to encourage failure – something that will likely trigger an SEC investigation of the firm.
The revelation has drawn sharp criticism from the Finnish government including the Prime Minister and the economy minister in particular, Jan Vapaavuori, who is quoted as saying “I find it difficult to understand the merits of this bonus.”
The question now is not just what happens to Elop, but what happens to the whole Microsoft/Nokia deal? It may not get derailed, but it may well be slowed down. With BlackBerry’s future still uncertain, despite news that a buyer has been found for the company, the two firms whose last remaining stronghold is Africa are going into catastrophic tailspin and leaving the door open for Samsung to dominate.
Via: The Verge
Source: Helsingin Sanomat
