Nokia head admits to red herring in Elop debacle

NOKIA’s chairman has been forced to admit he gave misleading information about Stephen Elop’s €18.8m payoff from the Finnish company.

Risto Siilasmaa told the Helsingin Sanomat newspaper yesterday that an “accident” meant he had said Mr Elop’s contract was the same as his predecessors’. In fact, a difference meant Mr Elop pockets €14.6m in stock awards that Olli-Pekka Kallasvuo, CE before him, would not have received.

The admission is embarrassing for Nokia as it comes amid a national furore in Finland over the payoff, triggered by Microsoft’s €5.44bn purchase of its cellphone business. Both the prime minister and finance minister have broken with their traditional reticence to comment on corporate matters to criticise the payoff, with the centre-right premier, Jyrki Katainen, branding it “quite outrageous”.

On Friday, Mr Siilasmaa had told the Financial Times and Helsingin Sanomat in a statement: “The terms and conditions are substantially similar to those of former Nokia CEOs.”

But in Nokia’s 2009 filings with the US Securities and Exchange Commission (SEC), the company said Mr Kallasvuo would, in the case of a change of control, receive 18 months of compensation in terms of salary and bonuses. No mention is made of stock awards. By contrast, Mr Elop’s contract — according to an SEC filing last year — stipulated that if he resigned after a change of control he would be entitled to 18 months of compensation and “his unvested equity will vest in an accelerated manner”.

Nokia said on Sunday that it had amended Mr Elop’s contract at the same time as the Microsoft deal to ensure that Mr Elop did not resign. Microsoft is paying 70% of the payout, which lawyers and former Nokia directors have pointed out is roughly equivalent to the amount of unvested equity Mr Elop held.

Questions have been raised in Finland about the role of the board, both in 2010 when they made the contract with Mr Elop, who is a former Microsoft executive, and now when they amended it.

People close to Nokia’s former board are privately questioning whether a sale of just Nokia’s cellphone arm — which represents about half of its revenues — was enough to trigger a change of control clause.

But Nokia has said such clauses typically cover the case where a sub- stantial part of the business is sold and not just a full takeover.

Mr Elop stopped being Nokia CE at the time of the Microsoft deal and is now head of the Finnish company’s devices business and will transfer to the US group when the deal is expected to close next year.

Mr Elop is seen as one of the favourites to replace Steve Ballmer as Microsoft’s chief executive next year.