As part of Microsoft's high-profile deal to buy the Finnish smartphone company, Nokia CEO Stephen Elop will be sitting comfortably on a $25.5 million severance package, according to the shareholder proxy statement released Wednesday.
Microsoft announced it was purchasing Nokia on Sept. 3 for $7.1 billion, just days after Microsoft CEO Steve Ballmer announced he would be stepping down within 12 months. Speculation flew whether the move slated Stephen Elop as the next in line to lead the tech giant.
The shareholder vote to make the acquisition official will be happening on Nov. 19 at 2 p.m. EEST. Shareholders will be voting to approve or deny the merger as well as the other changes that go along with it, one of those changes being Elop's compensation.
An amendment to Elop's contract, pending the shareholder vote, says that his move to Microsoft will entitle him to 18 months of compensation, which previously would have been denied to him if he was terminated with cause. While the amount is still subject to change due to fluctuating stock prices, Elop is currently estimated to receive a total of 18.8 million euros, or approximately $25.5 million.
The deal breaks down into 4.1 million euros ($5.5 million) in base salary and management incentives, 0.1 million euros ($135,000) in benefits and 14.6 million euros ($19.7 million) in equity awards. Nokia will pay 30 percent of the compensation, and Microsoft will pay the remaining 70 percent. At the current estimated amount, Microsoft will be paying just under $18 million for the former CEO.
When Elop joined Nokia in 2010, he was given $6.2 million for the switch. As he heads back to Microsoft, assuming the vote approves the deal, he will be stepping in as head of an expanded Devices team, reporting directly to Ballmer.
However, the price doesn't necessarily mean that Elop is slated to be the next Microsoft CEO, said Jeff Kagan, an independent technology analyst. Kagan has predicted in previous interviews with CRN that, while the move to Microsoft doesn't necessarily guarantee Elop a spot at the top, it does put him in a good position for the job.
"Twenty-five million dollars is a lot to you and me. To Microsoft it's like 2 cents," Kagan said. "To them, it's an inexpensive way to hang onto a potential CEO or senior executive of the new company."
Kagan said that it is normal for an executive to receive a large compensation package when a similar switch is made, and the price keeps growing.
"Every time one of these deals happens, the price goes up. Whether it's worth it is another conversation," Kagan said. "Microsoft is going to be keeping their eye on him, keeping their eye on a bunch of people."
PUBLISHED SEPT. 19, 2013