NOKIA
NASDAQ OMX Helsinki: NOK1V Meeting Date: 6/17/2014
After several years of disappointing results and shrinking market share in the competitive mobile phones business, Nokia shareholders were granted a reprieve when the company agreed to the sale of its devices and services business to Microsoft, which was approved by shareholders at an April EGM. The recently completed deal turned out to be an emotional one not only for Nokia’s shareholders, who saw the value of the share collapse during CEO Stephen Elop’s tenure, but also for Finland as a nation. According to figures from the Research Institute of the Finnish Economy, Nokia contributed to a quarter of the nation’s growth between the years 1998 and 2007. Despite the dramatic turnaround for Nokia’s business following the shedding of the unprofitable mobile phones business, the mood turned sour at the EGM as some shareholders openly questioned Mr. Elop’s short tenure at Nokia, when he oversaw cost cutting measures that they viewed as driving Nokia’s mobile phones business towards certain failure rather than enabling a turnaround. During the course of his three-year tenure, Nokia’s lost €6 billion in market value and sales nearly halved. These concerns are put into context by Mr. Elop’s former executive role at Microsoft, which he left to head Nokia in 2010 shortly before the signing of a strategic partnership between the two companies. Just three years later, Mr. Elop has walked away from Nokia with a €24.2 million severance payment and a new position at Microsoft, where he heads the very division managing the Nokia business which he agreed to divest. Mr. Elop has ever since been defending himself against accusations of being a Trojan horse for Microsoft. Similarly, Nokia’s board faces tough questions about whether the severance package, which included accelerated vesting of €20.1 million in equity upon the change in control, was appropriately structured with the aim of protecting shareholder value. In the run up to the June AGM, the board has made a point of amending the structure of the severance agreement for the new CEO, verging on admission that the previous agreement with Mr. Elop was not properly vetted. With none of the remuneration committee members responsible for the original agreement with Mr. Elop standing for re-election and no say on pay proposal, shareholders wishing to express their frustration through the ballot box are left with tough choices at the upcoming AGM. For those left with the impression that the board did or CEO did not go far enough in protecting shareholder value or in structuring the Company’s severance agreements, the ratification of board and CEO acts may be the only avenue for expressing disapproval.
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