Nokia chairman Risto Siilasmaa admitted on Tuesday that he had misled the public and Finland’s prime minister
over an 18.8 million euros (US$27.32 million) payoff to former chief executive Stephen Elop triggered by the sale of the mobile phone business to Microsoft.
Siilasmaa had tried to calm growing national anger at the massive payoff by saying that the terms were “substantially similar to those of former Nokia CEOs.”
However, on Tuesday he was forced to admit that the Canadian will pocket 14.6 million euros more than the previous Nokia boss, Olli-Pekka Kallasvuo, collected when he was fired three years ago.
Siilasmaa told Finnish news site Helsingin Sanomat that an “accident” during the formulation of the contract meant that Elop would collect the huge sum.
“This is a very unfortunate thing about the case, which, moreover, raises a lot of emotions,” Siilasmaa said, according to a translation of the Helsingin Sanomat article.
Nokia declined to comment further on Tuesday night.
Filings with the US Securities and Exchange Commission reveal that Elop’s contract requires him to be paid 14.6 million euros in share awards on top of 18 months’ salary. Kallasvuo collected only 100,000 shares on top of 18 months’ pay.
Siilasmaa’s admission is likely to reignite the heated national debate over Elop’s payoff, which was triggered by Microsoft’s 5.5 billion euros takeover.
Finnish Prime Minister Jyrki Katainen criticized the payoff on national TV on Saturday as “outrageous.”
“Many, with reason, are sure to be thinking about what is reasonable,” he said. “Apparently the practices of rewards by large corporations are so exceptional that they cannot be understood with common sense.”
Finnish Finance Minister Jutta Urpilainen said the payoff could spark unrest.
“In addition to the general toxic atmosphere, it may be a threat to social harmony,” she wrote on her blog.
The payout was triggered by a change of control clause in Elop’s contract. As part of the deal with Microsoft, Elop stood down as Nokia’s CEO to run the phone unit within Microsoft, his employer before he joined Nokia three years ago.
The payout works out at roughly 1 million euros for every 1 billion euros wiped off Nokia’s market value under Elop’s leadership. Microsoft is paying 70 percent of the payoff, which works out at roughly the same as the controversial share bonuses.
Nokia paid Elop a US$6 million signing bonus when he joined the company in 2010 on top of his US$1.4 million salary.
Elop warned staff after taking the top job that Nokia was standing on a “burning platform” surrounded by innovative competitors that were taking its market share. He quickly decided that the company should abandon its own operating software for smartphones and tie up with Microsoft instead.
Elop is widely seen as the frontrunner to replace Steve Ballmer as chief executive of Microsoft.