Cantillon: No cut for Elop payout despite Finnish outcry
Even the Finnish prime minister reckons the payoff for CEO is “wild”
Stephen Elop, the former Nokia chief executive officer, has reportedly refused to cut the $25.4 million reward he is set to receive
During the recession we have witnessed some rhino-hide immunity to media and public ire from bankers, politicians and property tycoons, but we are now witnessing something similar in the tech world.
Stephen Elop (pictured), the former Nokia chief executive officer, has reportedly refused to cut the $25.4 million reward he is set to receive when the sale of the Finnish company’s handset business to Microsoft is completed.
Admittedly Elop’s package is not an outlier when compared to his tech peers. The criticism seems to be focused more on the basis of the firm’s performance under his tenure. Elop’s effort to transform its handset business by betting on Microsoft’s Windows software failed to lead to an earnings recovery.
Nokia’s shares fell by 60 per cent during Elop’s three years at the helm, from €7.87 to €2.96, before rising to €3.97 when it agreed to the sale of its handset business to Microsoft this month. Elop is returning to his former employer as part of the deal.
Admittedly there is some good news for the Finnish firm; it will not bear the brunt of the cost of the package as Nokia amended Elop’s contract. Microsoft will pay 70 per cent of the projected total payoff, and Nokia the remainder.
There is another bright spot for the Finnish firm, which has earned a reputation for reinventing itself. Its mapping division – which is not being sold to Microsoft – is working with Mercedes-Benz in developing 3D maps for self-driving cars. Admittedly it is very early days for this technology, but as part of the publicity for this month’s Frankfurt auto show, a new Mercedes drove itself over 100km on German public roads using the system created in partnership between the two.
The next decade is expected to see a major push towards self-driving cars and Nokia is involved early.
That’s something positive to sweeten the bitterness in Finland surrounding Elop’s payout. It will be interesting to see if Microsoft cares about the backlash as it seeks a successor for outgoing chief executive Steve Ballmer. Elop is one of the favourites to take over the role.