Uneven Stephens

Nokia boss gets golden parachute without ejecting

Stephen Elop's $25 million golden parachute is hard to defend. Nokia's outgoing boss stands to earn this in the $7.2 billion sale of the group's handset business to Microsoft, his old employer. That has unnerved egalitarian Finland, which is already sore about the decline of a national champion. Sloppy communication hasn't helped.

But what's most awkward is that Elop has it both ways: he collects a payoff usually meant to compensate bosses for being fired or sidelined, while also taking a major role at Microsoft.

The outcry raises several questions. First, is the payoff merited? That's harder than it first looks. Nokia's value has plunged since Elop arrived in 2010. But he inherited a business in steep decline, secured a future in telecoms equipment, and hived off the phone unit to a deep-pocketed new owner. Many turnarounds end in far worse.

Second, is it culturally appropriate? US corporations throw around multi-million dollar packages like confetti. But Finland is an equal kind of place. Incomes for the top 10 per cent are 5.4 times those at the bottom, while the difference Stateside is 15.9 times. Downsizing Nokia has carried social costs. And the company's importance to Finland meant the deal was always likely to draw special scrutiny. So Elop cannot be surprised at the furore, even if 70 per cent of his money will come from Microsoft.

Third, was it communicated properly? Here Nokia clearly failed. The bulk of Elop's payoff relates to stock awards that will vest immediately, worth about ^14.6 million. Nokia's interim head, Risto Siilasmaa, wrongly claimed the same would have been true of Elop's predecessor. That lapse compounds the awkwardness.

Fourth, is it the right thing to do? The rationale for "change of control" payouts is to compensate CEOs for losing their jobs or being shunted sideways after a takeover. Yet, Elop is returning to Microsoft to head up an enlarged devices business - an important and presumably well-paid role. Sure, his payment might be contractually defensible. But it's hard to justify to a wider world rightly sceptical of outsize executive rewards.