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Stephen Elop cashes in richly for coming back to the fold

At the 2011 Mobile World Congress (MWC), the mobile industry's top trade show, Stephen Elop was asked outright by one member of the audience during a Q&A session whether he was a "Trojan horse".  Indeed, if Nokia Oyj.'s (HEX:NOK1V) appointment of Mr. Elop -- who served as head of Microsoft Corp.'s (MSFT) business division from 2008 to mid-2010 -- didn't raise enough eyebrows, his subsequent decision to switch Nokia over to solely using Microsoft's Windows Phone platform certainly did.

Three years have passed since he took over at Nokia and now Nokia has a proud new owner -- Microsoft.  And one of the terms of Nokia's acquisition is once again raising eyebrows about the Microsoft returner's role.

Mr. Elop -- who is stepping down as CEO to assume a role as Microsoft's EVP of Devices & Solutions.  This role is currently held by fast mover Julie Larson-Green, but comments by Microsoft CEO Steve Ballmer on the acquisition seemingly suggest that this fast-riser (Larson-Green) might be at least temporarily be demoted from her EVP spot.  Mr. Ballmer's letter to employees from earlier this month states:

Stephen Elop will be coming back to Microsoft, and he will lead an expanded Devices team, which includes all of our current Devices and Studios work and most of the teams coming over from Nokia, reporting to me.

Julie Larson-Green will continue to run the Devices and Studios team, and will be focused on the big launches this fall including Xbox One and our Surface enhancements. Julie will be joining Stephen’s team once the acquisition closes, and will work with him to shape the new organization.

The particularly eye-brow raising term of the Nokia acquisition is that it delivers Mr. Elop one whopper of a payday for that transition; Nokia is giving him a parting gift of €18.8M (~$25.5M USD) --  €4.2M ($5.7M USD) in salary and bonuses and €14.6M ($19.8M USD) in equity compensation.

Stephen Elop
Stephen Elop scored a "fat wad of cash" for delivering Nokia into the hands of his former employer -- and now "new" employer -- Microsoft.
[Image Source: (original); Jason Mick/DailyTech LLC (modifications)]

The Wall Street Journal first spotted this payout, which was disclosed in a regulatory filing by Nokia.

The big question now is whether Mr. Elop will rise even higher in Microsoft.  Some had speculated that Mr. Elop might be a leading candidate to replace current Mr Ballmer, who is stepping down from his CEO post by Aug. 2014.  If that happens, it may turn out that Mr. Elop is just "holding down the fort at the Devices and Studios team, and that Ms. Larson-Green will regain the EVP spot.

Of course Microsoft is also rumored to be actively pursuing Mr. Ballmers BFF Alan Mulally, President and CEO of Ford Motor Comp. (F).  Whether Mr. Elop gets the nod as Microsoft chief may depend in part on whether Mr. Mulally is willing to jump ship to Microsoft, a larger, but more troubled firm.  But regardless of his eventual position it's clear that Mr. Elop -- also a close friend of Steve Ballmer -- has played his roled to perfection, well, for Microsoft at least.

To be fair to Mr. Elop, even his critics should ask themselves -- who wouldn't play "Trojan horse" for a couple of years for a could $25M+ payout?

Source: WSJ

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I dont know...
By Labotomizer on 9/19/2013 11:01:33 PM , Rating: 4
Our company hired a new CEO for the purpose of streamlining our operations and make it more attractive in a buyout. Who is to say Nokia didn't do the same with Elop. Let's be honest, Symbian was failing and Nokia was going downhill fast. Elop made them attractive and made the investors plenty of money. Sounds like that's why they hired him. And he did his job well.

RE: I dont know...
By Omega215D on 9/20/2013 1:42:47 AM , Rating: 2
Not really, Symbian had a large amount of users in many places outside of the US. The US is not the world.

Symbian was a good OS for budget phones while the higher end version was meant for smartphones (the name escapes me at the moment).

RE: I dont know...
By Samus on 9/20/2013 4:37:55 AM , Rating: 2
Symbian was shit. Especially on the E70-series phones. Undoubtedly the buggiest mobile OS to ever see the light of day, it made BBOS seem futuristic. If Nokia wanted to push a linux-based open-source mobile OS, they should have just switched to Android like the rest of the industry did.

Although Android is a fragmented market with a lot of players, Nokia could make products that really stand out. Candybars with great keyboards and cameras, slates with excellent battery life, build quality and radios. Nokia's core business has always been reliability and quality, and 9/10 Android phones are neither.

RE: I dont know...
By piroroadkill on 9/22/2013 8:29:49 AM , Rating: 2
Symbian User Interface Quartz - UIQ.

I have a Sony Ericsson P900 & P990. (Although not my main phones now of course).

Fantastic for playing ScummVM games on! Resistive touchscreen with a stylus and the same res as the DOS games, no scaling.

They weren't shit devices, contrary to popular belief that all early smartphones were shit.

They had quirks that needed to be worked out, yes, and undoubtedly Apple & Google paved the way to slicker experiences, which I am thankful for.

RE: I dont know...
By BabelHuber on 9/20/2013 2:55:42 AM , Rating: 4
Elop did not do a good job, he destroyed Nokia so MS had to buy it:

In Q4 2012, Nokia had ~34% market share in the smartphone market, now it has 4% or so.

At the end of 2010, Symbian was already outdated, this is correct. And it is also true that in North America and Europe Symbian's market share was shrinking.

But Symbian still had 70% market share in China and 80% in India (IIRC).

And what did Elop do in February 2011? He declared that Symbian is 'years behind the competition' and that WP is Nokia's future.

This lead to a market share collapse of Nokia smartphones, even in the markets where they still were strong.

This is an act performed by an imbecile, really!

A smart CEO would have milked the cash cow Symbian still was until he had some replacement.

So instead of badmouthing his own products, he should have tried to

RE: I dont know...
By BabelHuber on 9/20/2013 2:59:59 AM , Rating: 3
... shift market share from Symbian to WP smoothly.

But instead he let the Symbian market share collapse and then later tried to rebuild it with WP.

But then it was too little, too late.

RE: I dont know...
By YearOfTheDingo on 9/20/2013 9:31:33 AM , Rating: 2
Right, like the market wouldn't have noticed that the company was laying off the people on the Symbian and Meego teams. Milkmaids need to be pay. There is no profit in milking a dying cow.

RE: I dont know...
By BabelHuber on 9/20/2013 9:56:47 AM , Rating: 3
Symbian was not dying in 2010.

This was the 2010 smartphone market share:

1 Nokia . . . . . . 100.3M . . . 34%
2 RIM . . . . . . . . 48.0M . . . 16%
3 Apple . . . . . . .47.5M . . . 16%
4 HTC . . . . . . . 25.0M . . . . 8%
5 Samsung . . . .24.0M . . . . 8%
6 Motorola . . . . 13.7M . . . . 5%
7 SonyEricsson . 9.5M . . . . 3%
8 LG . . . . . . . . . 7.0M . . . . 2%
9 Fujitsu . . . . . . 6.2M . . . . 2%
10 Sharp . . . . . . . 5.2M . . . . 2%
Others . . . . . . . . 11.6M
Total . . . . . . . . .297.9M


This is what Steven Elop inherited. And this is also what he threw away.

RE: I dont know...
By YearOfTheDingo on 9/20/2013 12:50:42 PM , Rating: 2
And BlackBerry's market cap was $40 billion in 2010. Look where they are now trying to milk skins and bones.

RE: I dont know...
By Mint on 9/21/2013 2:28:25 PM , Rating: 2
You can't show something wasn't dying with a single data point, genius. Go look at 2009, 2008 share and try to tell me that it wasn't dying.

Windows Mobile and RIM both plummeted at the same time in early 2011, and iPhone and Android shot up at the end of 2010. Are you going to tell me that Elop made all those things happen?

RE: I dont know...
By BabelHuber on 9/22/2013 3:20:56 AM , Rating: 2
You obviously haven't looked at the 2008 and 2009 data, Einstein.

Otherwise you would have seen that yes, Nokia's market share was declining, but sales numbers still rose.

So yes, Nokia sold more smartphones in 2010 than in 2009.

Only after Elop, the mandchurian CEO, declared Symbian dead in February 2011, the actual sales numbers declined.

So yes, it was necessary to replace Symbian in 2011. Nobody disputes this.

But it was utter madness to take actions to completely collapse Symbian.

The smart thing to do woud have been to release WP-phones while still milking Symbian at the same time (which at that time was still highly successfull in China, Japan, India, Russia, ...)

But you obviously think it is a good idea to badmouth your current products so that their sales collapse, while at the same time not having anything else to sell for the next 9 or 10 months?

This is what destroyed Nokia, and this was done exclusively by Elop.

RE: I dont know...
By NellyFromMA on 9/20/2013 12:55:03 PM , Rating: 2
Yeah, ask RIM / Blackberry how it's doing by staying the course. Oh, did I hear 40% of employees laid off? But hey, the company still hangs around....

When it comes to cost-value assessments, where are you guys coming up with your value parameters? Life of the company, irrespective of the value as it pertains to time?

RE: I dont know...
By NellyFromMA on 9/20/2013 12:55:40 PM , Rating: 2
Yeah, ask RIM / Blackberry how it's doing by staying the course. Oh, did I hear 40% of employees laid off? But hey, the company still hangs around....

When it comes to cost-value assessments, where are you guys coming up with your value parameters? Life of the company, irrespective of the value as it pertains to time?

RE: I dont know...
By fic2 on 9/20/2013 1:38:46 PM , Rating: 3
Financial Times said that Elop is being paid ~$1M for each $1B in market cap Nokia lost while he was the CEO. Elop made a lot of money but investors lost a lot of money.

If by "he did his job well" you mean he made Nokia cheaper for MS to buy, then you are right.

I'm starting to see a pattern here
By amanojaku on 9/19/2013 10:42:32 PM , Rating: 5
CEO of Boston Market in 1992, company files for bankruptcy in 1998, purchased by McDonalds in 2000
CEO of Macromedia in 2005, company is purchased by Adobe in 2005
CEO of Nokia in 2010, company is purchased by Microsoft in 2013

Every place he's worked has shown lackluster results during his tenure. MS, now that he's delivered Nokia into your hands, dump him. Fast.

RE: I'm starting to see a pattern here
By Omega215D on 9/20/2013 1:43:59 AM , Rating: 2
Maybe it was on purpose... get him in to sabotage the company so that someone else can acquire the tech and patents.

RE: I'm starting to see a pattern here
By themaster08 on 9/20/2013 1:50:16 AM , Rating: 2
Symbian's market share was declining more than 10% year-over-year before Elop took over.

By themaster08 on 9/20/2013 1:50:51 AM , Rating: 2
Apologies, this was supposed to be a response to your other post.

By NellyFromMA on 9/20/2013 12:52:11 PM , Rating: 2
Boston Market was a failure before him.

Macromedia products thrived for as long as they reasonable could by being aquired by Adobe. Had that not happened, Macromedia would be extinct WITHOUT profit for anyone, especially shareholders at the time.

Nokia wasn't sold in full to MS IIRC, and the devices division will likely see great synergy by being directly under MS umbrella going forward.

What is your assessment based off of? It looks like short-sighted and incomplete business and financial assessments.

Compare to BB
By zlandar on 9/20/2013 10:18:58 AM , Rating: 2
He got $2 billion more in value for Nokia compared to the current value of BB at $5 billion and quickly dropping.

Hard to predict whether Nokia would have done any better cranking out Android plus WM phones vs WM phones plus MS bribe.

Samsung is the only Android maker making any real money and Nokia is far weaker than Samsung in terms of capital and economies of scale. Odds would be heavily against Nokia directly competing Samsung head-to-head on the same Android platform.

Look at HTC. They produced the HTC One which was highly praised by reviewers. Did it turn their fortunes around? No. Why would Nokia be any different?

RE: Compare to BB
By YearOfTheDingo on 9/20/2013 1:54:05 PM , Rating: 2
Worth remembering too, that Nokia didn't sell their crown jewels to Microsoft--their large patent portfolio. Shedding the device division means the company can move aggressively against the Android makers without the fear of potential countersuits. It will probably end up making more money suing people who make Android phones than it would have making Android phones.

By mmichii on 9/19/2013 9:36:36 PM , Rating: 2
i'm sure he'll do just fine running whatever is left of ms into the ground. I hope mr mulally stays at ford. i thinks hes doing a good job. i was looking into getting a focus st in a year or two and i would hate to see ford regress without him. ps love the colors for the paint especially that metallic blue.

Failure of Leadership
By ResStellarum on 9/20/2013 9:31:25 AM , Rating: 2
If his (Elop's) mission was to sabotage Nokia's share price to the extent that Microsoft could acquire it for peanuts, then he's achieved that objective.

But it wasn't just Elop though, the board of directors signed off on hiring him and going Windows Mobile exclusive. That's some pretty shoddy leadership right there.

I'm willing to bet that if Nokia had gone Android, they'd be making healthy profits now, possibly neck and neck with Samsung. Unfortunately, the people making the decisions were incompetent and thought a 3% marketshare OS that no one liked would save them. Heck, they would have been better staying with Symbian/Meego.

By wbwarren57 on 9/20/2013 2:34:26 PM , Rating: 2
Did Microsoft indemnify Elop against Nokia shareholder lawsuits? If so, THAT is the most valuable part of Elop’s golden parachute.

In my opinion, Elop should be sued by Nokia shareholders for not releasing an Andriod phone as soon as possible after becoming CEO. If he had, Nokia would have sold a lot more of its excellent handsets at greater profit (due to economies of scale and scope), and would have had better, deeper relationships with the carriers. The fact that he didn’t have Nokia release an Android phone only benefited Microsoft in helping to preserve (at least some) interest in WinPhone as well as eventually leaving Nokia weaker and thus, much cheaper to acquire.

come on
By GulWestfale on 9/19/13, Rating: 0
Click trolling
By OoklaTheMok on 9/20/13, Rating: -1
"There's no chance that the iPhone is going to get any significant market share. No chance." -- Microsoft CEO Steve Ballmer

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