Nokia's Devices & Services top executive Stephen Elop will get 18.8 million euro (about USD 25.5 million) if the deal to acquire the handset business of the Finnish company by Microsoft goes through.
Elop, who earlier served as CEO of Nokia, after the closing of the USD 7.2 billion deal is expected to join the US-headquartered software giant.
"Although the actual amount of these termination payments (to Elop) and the value of equity acceleration will not be determined until such termination occurs...Such pro forma amounts are estimated to be approximately 18.8 million euro in the aggregate," Nokia said in a filing to the US Securities and Exchange Commission (SEC) today.
The amount includes base salary and management incentive of 4.1 million euro, value of benefits 0.1 million euro and pro-forma value of equity awards of 14.6 million euro, the filing added.
Once the actual amount is determined, pursuant to terms of Purchase Agreement, 30 per cent of the amount (5.65 million euro) will be borne by Nokia and remaining 70 per cent amount (13.17 million euro) will be borne by Microsoft, Nokia said.
Elop is subject to a covenant restricting him from working for certain specified competitors of Nokia, provided upon his commencement of employment with Microsoft, Nokia will waive his competition restriction as to Microsoft, it said.
Elaborating on Elop's agreement with Nokia, the firm said in the filing: "We entered into an amendment with Elop to his service contract, which became effective on the date of the Purchase Agreement. Under the terms of the amendment, Elop resigned from our Board of Directors and from his positions of President and Chief Executive Officer as of the date following the date of the Purchase Agreement, September 3, 2013."
On September 3, Microsoft said it will acquire Nokia's handset business for 5.44 billion euros (USD 7.17 billion) in an effort to strengthen its position in the smartphone market.
Under the amendment to his service contract, Elop agreed that the change in his position would not entitle him to terminate his service contract for cause under the terms of his service contract, the filing said.
Elop's service contract provides for payment of 18 months of his base salary and management short-term cash incentive as well as accelerated vesting of his outstanding equity awards upon such a termination by him for cause, it added.
Nokia said: "...Under change of control provisions of Elop's agreement as amended, Elop may terminate his employment on or following the Closing or Nokia may terminate his employment without cause prior to the Closing."
In either such case, Elop will be entitled to receive 18 months of his base salary and management short-term cash incentive (calculated at 100 per cent of target) as well as accelerated vesting of his outstanding equity awards, the filing said.
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