Nokia’s Elop Takes Massive Pay Cut, Still Making $5M Plus

rated by 0 users
This post has 7 Replies | 0 Followers

Top 10 Contributor
Posts 24,863
Points 1,115,765
Joined: Sep 2007
ForumsAdministrator
News Posted: Fri, Mar 8 2013 10:40 AM
As Nokia struggles to regain relevancy in a mobile market dominated by Apple and Samsung, Stephen Elop, the company's chief executive officer, took a 45 percent pay cut in 2012, according to a U.S. regulatory filing. No need to head off to the pantry and put together a care package for Mr. Elop, however, as he still took home 4.33 million euros, or around $5.63 million in U.S. currency, so it's safe to say he's not going hungry anytime soon.

Mr. Elop earned 7.94 million, or around $10.3 million, in 2011. His base salary was actually higher in 2012 than in 2011, but his stock option awards declined and he didn't earn a performance bonus, Reuters reports.

Nokia Store
Image Source: Flickr (nechbi)

Prior to being hired by Nokia in March of last year (of which he received a $6 million signing bonus), Mr. Elop worked for Microsoft as the head of the Business Division. That may have played a role in his decision to essentially go all-in with Microsoft's Windows Phone platform, gambling on unproven software at a time when Android usage is at an all-time high.

Though it's relatively early, Windows Phone isn't yet providing a ton of competition to Android or iOS. Even still, Nokia managed to squeak out a profit last quarter, in party by selling more than 4 million Lumia smartphones.
  • | Post Points: 65
Not Ranked
Posts 44
Points 485
Joined: Apr 2012
semitope replied on Fri, Mar 8 2013 11:31 AM

1 year in a job like that and you are set for life, as far as most people are concerned anyway.

  • | Post Points: 20
Top 500 Contributor
Posts 196
Points 2,090
Joined: Feb 2010

I'd like to have his signing bonus.

  • | Post Points: 5
Top 10 Contributor
Posts 5,048
Points 60,675
Joined: May 2008
Location: U.S.
Moderator
3vi1 replied on Fri, Mar 8 2013 11:58 AM

If there were any justice in the world, he would owe them money. He couldn't put old loyalties aside and do what's best for the company and its shareholders. Even if he somehow honestly believed WinPhone could win in the end-game, now was not the time to tie your profits to their boat-anchor.

And, you can't say he seriously believed WinPhone to be a player.  He has more info than I do at hand, and even I knew it was ludicrous.  Look at my comments from five years ago - I acknowledge a winner when it's assured.  This strategy was, however, doomed from the get-go.

What part of "Ph'nglui mglw'nafh Cthulhu R'lyeh wgah'nagl fhtagn" don't you understand?

++++++++++++[>++++>+++++++++>+++>+<<<<-]>+++.>++++++++++.-------------.+++.>---.>--.

  • | Post Points: 5
Top 100 Contributor
Posts 1,038
Points 11,350
Joined: Jul 2009
Joel H replied on Fri, Mar 8 2013 6:35 PM

I see no reason to think Elop *didn't* believe he was making the right choice.Because seriously, what are you suggesting? That MS paid him off to such a degree that he was willing to destroy the entire company -- a move that would almost surely see him dragged into court?

I agree with you that the Nokia / MS alliance hasn't paid off. Like you, I was dubious from the start. But instead of assuming Elop clearly knew better, I assume that MS gave him a great deal of information that made him think it *was* a good deal, long term.

  • | Post Points: 20
Top 10 Contributor
Posts 5,048
Points 60,675
Joined: May 2008
Location: U.S.
Moderator
3vi1 replied on Sat, Mar 9 2013 9:33 AM

Given MS's prior performance in the mobile market, I'd like to see what evidence he used to determine that they would somehow be profitable within five years. If Microsoft has some super secret information that makes it the obvious choice, they really should tell the people buying phones.

I do think Elop broke the law, and that he should be sued by the Nokia shareholders. He owned at least 240,000 shares of Microsoft stock and was obviously working under a conflict of interest when he picked their mobile OS. There was simply no other reason to choose it.  The ethical (and legal) thing to do would have been to recuse himself from the selection process.

What part of "Ph'nglui mglw'nafh Cthulhu R'lyeh wgah'nagl fhtagn" don't you understand?

++++++++++++[>++++>+++++++++>+++>+<<<<-]>+++.>++++++++++.-------------.+++.>---.>--.

  • | Post Points: 20
Top 200 Contributor
Posts 428
Points 3,530
Joined: Jun 2012
RiCoFrost replied on Sun, Mar 10 2013 8:00 PM

Oh poor man.... :P

  • | Post Points: 5
Top 100 Contributor
Posts 1,038
Points 11,350
Joined: Jul 2009
Joel H replied on Sun, Mar 10 2013 11:41 PM

Seriously, look at this without the anti-MS blinders. At least *try*. Remember, we aren't talking about whether or not Nokia's MS decision was a good one -- we're talking about whether or not Elop could have reasonably *believed* it was a good decision.

So let's look at some historical data:

1) Windows Mobile was once a huge player in the smartphone space. As recently as 2009 (we're talking about 2011), it had commanded nearly 10% of the market. In 2008 and 2007 it had been well above 10%. Yes, that figure had fallen off sharply -- but the WP team was talking a big game. WP was clearly superior to anything the WM folks had done .

2) I think WP's relative quality is important here. No one ever liked Windows Mobile, as far as I can tell. At its best, it was clunky. Windows Phone has problems of its own, but the difference between WM and WP is that WP suffers from app availability and low sales -- as opposed to constant crashes, inherently terrible battery life, no touch support, tiny screens, and a host of other missing features.

3) Elop came from MS. He was probably far more familiar with MS's products as a result, even if that familiarity was general. It's literally human nature: http://en.wikipedia.org/wiki/Confirmation_bias

4) I think it's fair to say that Nokia had a real problem in 2011. Elop didn't want to be another "Me too" Android vendor. Indeed, much has been written recently about the way vendors like Samsung, HTC, Motorola, and Amazon are downplaying the "Android" label in favor of their own advertising.

What were Elop's options? Symbian? Needed massive work. MeeGo? There was potential here -- and Intel was *furious* about Nokia's decision -- but there's no understating the difficulty of launching MeeGo into the market and making it work in the face of Android.

Elop wanted something unique for Nokia. He went with a product he knew, from a company he'd worked for.

Again, I'm not arguing that he made he the right decision. I'm arguing that his decision was reasonable given his own history and views. CEOs are sometimes brought in, in the hopes that they have the vision and ability to make sea changes in a company's direction. I think Elop made the wrong choice, but I don't think he made it for nefarious reasons or out of a desire to damage Nokia.

  • | Post Points: 5
Page 1 of 1 (8 items) | RSS