Today it seems everywhere you turn in the financial media, there is a story about how Nokia’s chairman screwed up in disclosing information about Stephen Elop’s bonus package to the media. Some of the reporting on it is a bit wonky, so I thought I’d clear things up.
Long story short, Nokia’s chairman was initially quoted as saying Elop’s contract was essentially the same as that of the prior CEO, Olli-Pekka Kallasvuo. When a Finnish newspaper, “Helsingin Sanomat”, dug into his employment contract, which is published to the SEC website, they discovered one important major difference. Elop stands to have his stock compensation vested in an accelerated manner should he resign following a change of control. The prior Finnish CEO didn’t have this clause. The difference amounts to about $25 million, according to various other folks who did the math (I didn’t, and I’m assuming their math is correct).
People love to complain about these things. A Forbes article even went so far as to say that Elop gets paid specifically because he managed to get the stock to go down, and then sharply up again on a takeover bid from Microsoft. The Forbes piece made it seem like this roller coaster action was a requirement to trigger the bonus.
That’s not true. Here’s what is true: