As we noted last week, Stephen Elop is set to receive a $25 million payment as a result of the Nokia sales deal with Microsoft, something pending regulatory approval. According to Finnish press, Elop’s contract contained a clause not found in previous CEOs’ contracts that would score him such hefty funds in the event that the company’s shares would drop and the business be sold, with the shares rising again from the bottom of the proverbial barrel.
According to Forbes, Finnish newspapers discovered that Nokia had lied regarding Elop’s contract, stating that it was “essentially the same” as the contract given to CEOs before him. The reality came to light when the SEC filings became available, with it being discovered earlier today that the contract had one large difference, entitling Elop to millions in the form of an immediate share price performance bonus should Nokia enter into a “change of control” scenario.
Such a scenario arose with the acquisition of Nokia’s handset division by Microsoft, with one contingency being that the share price for the company rise from the “absolute bottom” rather than a higher ground to get the bonus. Such a condition could be met easily, allowing for the shares to simply fall and then rise again from that crash, something that both spurred and resulted from the Microsoft deal.
The differences between this bonus structure and that of previous CEO contracts is being chalked up to a “working place accident” by Nokia’s legal department, the result of a “slight discrepancy” that ultimately provided a reason for Nokia’s handset division to be sold to Microsoft, with Elop pocketing a fair bit of funds as a result. Elop is in consideration as a possible replacement for Microsoft CEO Ballmer when he retires.