Nokia mistaken in saying Elop's contract was same as predecessor's

HELSINKI, Sept 24 Tue Sep 24, 2013 12:43pm EDT

HELSINKI, Sept 24 (Reuters) - Nokia's interim boss Risto Siilasmaa said he erred in describing a clause in former chief executive Stephen Elop's employment contract, which resulted in an 18.8 million-euro ($25.4 million) termination payment, as similar to his predecessor's.

Elop, the ex-Microsoft executive hired to turn Nokia around, stands to receive the pay off if shareholders approve Nokia's plans to sell its handset business to Microsoft.

Siilasmaa had previously said Elop's predecessor Olli-Pekka Kallasvuo had a similar employment deal, but on Tuesday said he was wrong.

"All the details were not checked," he told Finnish daily newspaper Helsingin Sanomat. Nokia confirmed his remarks.

Finnish Finance Minister Jutta Urpilainen, a leader of the Social Democratic Party supported by workers' unions, said over the weekend that the hefty sum raised questions about fairness.

Elop, appointed in 2010, made the controversial decision to adopt Microsoft's Windows Phone software.

Under the "change of control" clause, Elop, who has stepped down from his role as CEO to avoid a conflict of interest, is entitled to 18 months of his base salary plus a short-term management cash incentive, equivalent to a total of around 4.2 million euros.

He would also be in line for around 14.6 million euros from an accelerated vesting of his outstanding equity awards.

Previous Nokia executives had "change of control" clauses in their contracts, but did not have the equity awards clause, which is common among U.S. executives' employment contracts. Elop was Nokia's first non-Finnish CEO.

Microsoft is set to pay around 70 percent of the total, which is also lower than many similar payments, known as "golden parachutes", granted to U.S. executives.

The golden parachute for H.J. Heinz CEO William Johnson was set at about $56 million in March after the ketchup maker's acquisition by Berkshire Hathaway and 3G Capital.

Payments on this scale are rare in Finland. Urpilainen on Saturday wrote in her blog that "Nokia's Stephen Elop's 19 million euros compensation has rightly caused discussion."

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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