On Tuesday, Nokia interim boss Risto Siilasmaa backed off recent statements he made indicating that former CEO Stephen Elop's employment contract was the same as Elop's predecessor, Olli-Pekka Kallasvuo. The whole situation came to light because Helsingin Sanomat, Finland's largest daily paper, reported that Elop will receive an €18.8 million ($25.4 million) termination payment that wasn't available to Kallasvuo. Elop stepped down in light of Microsoft agreeing to purchase Nokia's phone business. As a former Microsoft employee, Elop wanted to avoid any conflicts of interest, according to Reuters.
Siilasmaa initially discussed Elop's contract with Helsingin Sanomat last Friday, but he told the paper today that "all the details were not checked." Nokia later reaffirmed the new report. This updated compensation figure results from a "change of control" clause in Elop's contract that Kallasvuo did not have. According to Forbes, the clause meant Elop was entitled to an "immediate share price performance bonus" if a "change of control" occurred. And as fate would have it, stock prices dropped under Elop, leading to the Microsoft sale—which led to stock prices rebounding to an extent.
Reuters shared the breakdown of Elop's potential €18.8 million ($25.4 million) bonus. Elop gets 18 months of base salary plus a "short-term management cash incentive" for a total of €4.2 million ($5.66 million). On top of this, Elop could get €14.6 million ($19.69 million) through "accelerated vesting" of his remaining equity awards. The news service went on to note that "change of control" clauses like this are common in US business, not in Finland. Elop was Nokia's first non-Finnish CEO.
As part of its deal to purchase, Microsoft will handle 70 percent of this compensation in what's commonly referred to as a "golden parachute" (another practice common in the US but not in Finland).
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