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Elop's enlarged package claim was a cock-up, admits Nokia chairman

'Twas an 'accident' to say whopping £15.6m payoff was unremarkable

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Nokia's chairman has admitted he was wrong to say that CEO Stephen Elop's €18.8m (£15.6m) payoff was all very regular and run of the mill.

As the Finnish giant came under political pressure for promising its outgoing chief exec the whopping windfall, chairman Risto Siilasmaa incorrectly told the press last week that Elop's golden goodbye was just the same as his predecessors' - and thus nothing to get upset about.

In fact, it was significantly more, thanks to €14.6m in stock awards that weren't on the table for the previous CEO Olli-Pekka Kallasvuo.

Ex-Microsoft executive Elop is heading back to the Redmond software giant, which on 3 September announced its €5.4bn move to buy Nokia's phone-making division. That declaration came on the same day that Elop apparently negotiated a more lucrative golden goodbye than the terms set out in his original contract. However, 70 per cent of the wedge, most of which is in shares, will be paid by Microsoft. The revised deal also eased the restrictions on working for a competitor.

Elop was originally eligible for one and a half years of salary, bonuses and share incentives if the company were to be sold or the management replaced. Siilasmaa had told reporters that Elop's bonuses would be in line with those of previous Nokia chief executives. Siilasmaa has now admitted to Finnish newspaper Helsingin Sanomat that an “accident” had been made. The paper also reports that Elop is refusing to accept a smaller bonus because he's getting divorced - an unusually scurrilous detail for the Finnish press.

Finland's Prime Minister Jyrki Katainen called Elop's exit bonus “outrageous”, while the country's opposition leader warned of a "a threat to social harmony". Quite what he means isn't clear: perhaps small boys will stop helping old ladies across the road, or Finns will start casually micturating in public swimming pools.

The bonus is a gift to conspiracy theorists who allege that Elop was sent to Nokia from Microsoft in 2010 in order to sell the Finns' phone-making biz back to his former employer on the cheap; the incentives in Elop's final contract appear to ensure he was motivated to sell out quickly, rather than improve the share price.

That last part about Elop's incentives is unarguable, but the full conspiracy theory ignores the fact that the deal to sell the devices unit to Microsoft had already been made, and approved by the board, when the directors signed Elop's revised contract. It looks like carelessness, rather than conspiracy.

You can find the details of Elop's new contract in the proxy materials for Nokia's extraordinary general meeting about the sale to Microsoft here [PDF] on page 32. ®

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