Linked by Thom Holwerda on Tue 24th Sep 2013 11:44 UTC
PDAs, Cellphones, Wireless

Finland is boiling with rage this weekend over the $25 M bonus payment the CEO Stephen Elop is set to receive as he leaves Nokia after his two-year tenure. Questions are now being raised by the oddest aspect of the bonus: the board of Nokia seems to have given Elop a $25 M incentive to sell the handset unit cheaply to Microsoft way back in in 2010. This effectively means that the board hired a man who was given a giant carrot to drive down Nokia's overall valuation and phone volumes while preparing a sale to Microsoft. What could possibly be a reason to structure Elop's original contract in this manner? Did the board in fact end up promising Elop more compensation in case he sells the phone division than if he runs it with modest success?

Vindication. We were right all along.

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Comment by Nelson
by Nelson on Tue 24th Sep 2013 12:24 UTC
Nelson
Member since:
2005-11-29

Considering his compensation is tied to stock options, lowballing the stock (which he hasn't done, or he would've sold it when it was less than $4 a share) wouldn't make sense financially for him.

There was no specific clause in his contract that said "Sell to Microsoft and get $25 million". It merely treats an acquisition the same as being let go from the company compensation wise, a much less serious offense.

The Nokia board could've fired him Sept 4th and he'd still get $25 million.

CEOs have golden parachutes. Who knew. This simpleton view of how companies work is all too common here. I'm glad I ignored the endless piles of bullshit here and loaded up on Nokia stock while it was low, made a nice return.

Elop offloaded an unprofitable division to the best suitor (Microsoft wants Windows Phone, let them finance it) and simultaneously is leaving Nokia flush with cash. Nokia will have billions in cash, no debt, and be impervious to patent litigation. They just beat HTC over non SEPs, the money train is just starting for their patent arsenal.

Market cap is a fickle thing, it was $14 billion prior to the announcement of the deal, its $20 billion now. Setting Nokia up on firm ground and leaving them with nothing but upside is the opposite of killing the company.

But of course, the small minds here are allergic to common sense and don't own any Nokia stock, never shorted any Nokia stock, and couldn't predict what the weather will be like tomorrow let alone the state of a company like Nokia. You have people who judge the company based off of the results of one division, and say its going to die.

BBRY just got cremated, their CEO accepted a $150 million penalty for a non assured purchase, but you're all getting hot in your seats over a golden parachute. Jesus christ.

Edited 2013-09-24 12:27 UTC

Reply Score: -4

RE: Comment by Nelson
by Radio on Tue 24th Sep 2013 12:42 in reply to "Comment by Nelson"
Radio Member since:
2009-06-20

You know how to leave a company flush with cash? Sell all assets, fire everybody, and voilĂ !

This is not how you run a company.

This simpleton view of how companies work is all too common here.
I really wonder how we managed to have economic growth before, when CEO weren't rewarded with golden parachutes - a novel "natural rule of how companies work" which started only in the 80s.

Reply Parent Score: 6

RE[2]: Comment by Nelson
by Nelson on Tue 24th Sep 2013 13:51 in reply to "RE: Comment by Nelson"
Nelson Member since:
2005-11-29

But they didn't sell off all assets or fire everybody. What the fuck are you talking about. You don't get to make things up.

Reply Parent Score: 1

RE: Comment by Nelson
by hamster on Tue 24th Sep 2013 12:58 in reply to "Comment by Nelson"
hamster Member since:
2006-10-06


But of course, the small minds here are allergic to common sense and don't own any Nokia stock, never shorted any Nokia stock, and couldn't predict what the weather will be like tomorrow let alone the state of a company like Nokia. You have people who judge the company based off of the results of one division, and say its going to die.


If it's your kind of commen sence where should look at number out of context then i think you are correct about people being allergic.

Reply Parent Score: 4

RE[2]: Comment by Nelson
by Nelson on Tue 24th Sep 2013 17:07 in reply to "RE: Comment by Nelson"
Nelson Member since:
2005-11-29

Why don't you give my numbers context then, genius? Otherwise keep spinning on your wheel.

Reply Parent Score: 3

RE: Comment by Nelson
by kwan_e on Tue 24th Sep 2013 13:12 in reply to "Comment by Nelson"
kwan_e Member since:
2007-02-18

Considering his compensation is tied to stock options, lowballing the stock (which he hasn't done, or he would've sold it when it was less than $4 a share) wouldn't make sense financially for him.
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.
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CEOs have golden parachutes. Who knew. This simpleton view of how companies work is all too common here. I'm glad I ignored the endless piles of bullshit here and loaded up on Nokia stock while it was low, made a nice return.


But it was low enough for you to buy some...

There was no specific clause in his contract that said "Sell to Microsoft and get $25 million". It merely treats an acquisition the same as being let go from the company compensation wise, a much less serious offense.


So everything ever written is always written exactly as the intention?

lowballing the stock wouldn't make sense financially for him.
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.
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The Nokia board could've fired him Sept 4th and he'd still get $25 million.


Do you have short term memory loss within the time span of you writing a comment?

Market cap is a fickle thing, it was $14 billion prior to the announcement of the deal, its $20 billion now. Setting Nokia up on firm ground and leaving them with nothing but upside is the opposite of killing the company.


What was the market cap before Elop?

Reply Parent Score: 3

v RE[2]: Comment by Nelson
by Nelson on Tue 24th Sep 2013 13:49 in reply to "RE: Comment by Nelson"
RE[2]: Comment by Nelson
by tylerdurden on Tue 24th Sep 2013 16:51 in reply to "RE: Comment by Nelson"
tylerdurden Member since:
2009-03-17



What was the market cap before Elop?


It was around 56ish Billion, now it's around 24ish Billion.

Reply Parent Score: 8

RE: Comment by Nelson
by galvanash on Tue 24th Sep 2013 14:03 in reply to "Comment by Nelson"
galvanash Member since:
2006-01-25

I'm glad I ignored the endless piles of bullshit here and loaded up on Nokia stock while it was low, made a nice return.


But of course, the small minds here are allergic to common sense and don't own any Nokia stock, never shorted any Nokia stock...


Um, maybe because this isn't an investment forum? If your argument is and has always been ultimately about market performance, why didn't you just say so like months and months ago? You would have gotten a lot less heated arguments over your opinions, because frankly very few people here care one wit about Nokia's stock price...

I for one would not have argued that what Elop did wouldn't net a modest return for share holders - my problem with it is they dismantled a once great company without ever really even trying to compete on their own terms.

Everyone is having some fun right now at the expense of BlackBerry because they failed miserably. They did, they took too long and they delivered too little - but at least they went out on their own sword, not with someone else's dagger in their back.

From a purely financial perspective I actually think that Nokia may well have gone the right route - there is a very good chance they would have failed badly and ended up in far worse shape than they are in now. But then again I don't have stock in Nokia, so I don't much care.

If you think most of the opinions on this forum are about stock market performance your really missing the forest through the trees...

Reply Parent Score: 11

RE[2]: Comment by Nelson
by Nelson on Tue 24th Sep 2013 14:15 in reply to "RE: Comment by Nelson"
Nelson Member since:
2005-11-29

I'm sorry, but being sold off to an investment bank because BBRY was too pigheaded to see they didn't have the cash to compete on their own isn't smart to me, or morally righteous. Its actually the opposite, its almost criminally negligent.

What's worse, having a single division bought by Microsoft, or being bought whole by a non tech company and turned into a zombie firm of sorts?

I've always maintained that this is about Nokia's financials, and I didn't let the obsession some of you had with Android, MeeGo, or (even more laughably) Symbian cloud my judgment. The results speak for itself, Elop, who's ultimate job is to protect shareholder value did a terrific job.

He transferred the phone division to a healthy buyer with an interest in continuing the vision that many employees in Finland worked on, and he unlocked shareholder value for the remaining company.

Dying valiantly is nice, but not dying is better. Lumia phones will be sold for time to come, BB10 handsets will go right up there with webOS as foolish endeavors by companies who overestimated their own resources.

Reply Parent Score: -1

RE: Comment by Nelson
by Bill Shooter of Bul on Tue 24th Sep 2013 14:40 in reply to "Comment by Nelson"
Bill Shooter of Bul Member since:
2006-07-14

That's a very business school answer. Its a very broken part of our economy that we reward CEO's so highly regardless of their success.

There really is no honest view of situation other than Steven Elop helped himself and Microsoft, more than he helped Nokia or its stockholders. Regardless of what you think about any party involved or their motivations, that is the objective outcome.

Reply Parent Score: 8

RE[2]: Comment by Nelson
by lucas_maximus on Tue 24th Sep 2013 16:31 in reply to "RE: Comment by Nelson"
lucas_maximus Member since:
2009-08-18

If the stock went up surely that benefited the shareholders as well, who are ultimately the owners of the company.

Reply Parent Score: 2