STEPHEN ELOP is probably the most hated man in Finland at the moment. First he failed spectacularly in turning around Nokia, the pride of Finland. Then, when this failure was finally acknowledged and the handset division sold off, he is paid €18.8 million. How can this payment be justified?
MANY people don’t seem to think it is reasonable. Politicians, Nokia employees and investors have all criticised the payoff. Risto Siilasmaa, the chairman of the board and acting CEO, said Nokia had to pay this amount because it was in Elop’s contract.
ACCORDING to documents released by the company, Nokia must pay Elop 18 months of base salary and management short-term cash incentives of €4.1 million. He will get an extra €0.1 million in benefits. Finally there is the accelerated vesting of his outstanding equity awards, which should total about €14.6 million.
THE reason Elop is eligible for this payoff is because his employment contract is being severed and a change of control is happening. Apparently, the sale of Devices & Services constitutes a “change in control,” although I don’t necessarily agree with that idea.
GENERALLY speaking, a company’s top executives are paid with a salary and bonuses contingent upon how well they do. I believe – as long as it is set up correctly – this is the proper way to pay not only managers, but even regular employees. People should be rewarded for the good job they do. If they don’t do good work, they shouldn’t be rewarded.
David J. Cord
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