According to Finland’s largest newspaper, Helsingin Snomat, Nokia’s board made false statements about CEO Stephen Elop’s compensation. Last week, Nokia Chairman Siilasmaa claimed the CEO’s compensation was “essentially the same” as his predecessor’s. But that turned out to be a lie. A pretty major lie at that.
After the newspaper dug around SEC filings, it discovered Elop was entitled to bonuses based on “change of control” situations. What exactly is a “change of control” situation? Well, say something like selling Nokia’s phone division to Microsoft.
Forbes laid out the scenario where Elop stood to rake in around $25 million: if in the event Nokia’s stock price plummeted, then sold the company to Microsoft to raise funds, and then the share prices rebounded quickly (but not all the way to where it was prior to Elop joining Nokia).
So in theory Elop’s contract, approved by the board, would incentivize Elop to run the company in to the ground and sell the company to then pocket a cool $25 million.
Quite strange if you ask me. This isn’t necessarily incentives found in most executive compensation packages. I’m sure shareholders would have something to say about this matter. Especially when the matter was swept under the rug as “essentially the same.”