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September 25, 2013 6:24 pm
Nokia’s chairman asked Stephen Elop, the Finnish group’s former chief executive, if he would forgo part or all of his €18.8m pay-off several days ago as the furore over it grew.
People close to Nokia said that as pressure mounted over the weekend from Finnish politicians, including the prime minister, Risto Siilasmaa enquired whether Mr Elop would return some of the money.
Mr Elop declined. According to one person familiar with the matter and the Helsingin Sanomat newspaper, he told Mr Siilasmaa he could not do so as he was in the middle of divorcing his wife. Nokia said it had no comment on the matter.
It is the latest twist in a week-long drama that has brought Nokia, its board and Mr Elop under scrutiny. Criticism of Mr Elop’s pay-off peaked on Saturday when Jyrki Katainen, Finland’s prime minister, called it “quite outrageous”.
Mr Siilasmaa, who had defended the pay-off on Friday in a brief statement, was forced to admit this week that he had given misleading information and that Mr Elop in fact had a more lucrative contract than his predecessors.
Speaking to the Financial Times on Wednesday, Mr Siilasmaa sought to draw a line under the pay-off saga. He started by apologising for the lack of clarity in Nokia’s disclosure of the pay-off in proxy materials on Thursday for its November shareholder meeting.
“It is first of all a very complicated set of contracts. There has been a very emotional discussion in the last few days and I understand it is very difficult to understand [the proxy material]. It is not very clear,” he said.
But Mr Siilasmaa defended the payout, under which Microsoft – which is buying Nokia’s mobile phone business for €5.44bn and which is Mr Elop’s past and future employer – is paying 70 per cent of the cash. “I was very happy because I felt I was saving quite a lot of shareholders’ money.”
He explained why Nokia had amended Mr Elop’s contract at the same time as the Microsoft deal, saying that otherwise Mr Elop had the right to “call a breach if we change[d] his role considerably”.
Despite changing the contract to ensure Mr Elop did not have to resign to trigger his pay-off, Mr Siilasmaa said there had never been any question of the former chief executive resigning: “Stephen has been very constructive throughout the process.”
He added that Mr Elop had waived his right to call his demotion from chief executive a breach. “The net outcome to Stephen is only negative. From our shareholders’ point of view the big difference is if he had called it a breach we would have had to pay all the compensation,” Mr Siilasmaa said.
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