Elop bonus by Tomi Ahonen

Yesterday I wrote about the book “Operaatio Elop”. Today I want to reflect that to what Tomi Ahonen has wrote in the past. Let’s begin with his tweets where Tomi has told how that book is “a VERY well researched and accurate account of how Nokia was wrecked“:
tomiagreeswithbook [1]
(And he has been saying that to other people too.) [2]

That is pretty bad choice from him as the book basically nullifies everything he has said about Elop, especially this agenda:

Elop’s ‘Microsoft Mole’ mission was not obvious at the time but with hindsight now, its clear he had the ok for this before he was let go from Microsoft. Elop came into Nokia to sell it to Microsoft, not to turn Nokia around and bring it strong and competitive again. We see it now, the actions are loud and clear. Its been his mission from day 1.

Tomi Ahonen, August 26, 2013 [3]

This goes on further:

Yes, Elop had a contract that would pay him 25 million dollars if he managed to sell Nokia’s handset unit to Microsoft.

Tomi Ahonen, September 23, 2013 [4]
(This was opening of his 15,600 word blog post about how Elop had an incentive that was specifically rigged to make him wreck Nokia and sell it to Microsoft.)

Considering all this background Tomi ought to read the book full before he starts to recommend it. Here are the Tomi-approved facts from the book (some of these are familiar from previous blog post):

Tomi’s view is based on what has been explained in the book like this: After selling Nokia’s phone business to Microsoft Elop got 18,8 million euros worth of salary, compensations and bonuses. That broke into media as “incentive” that drove Elop to first deliberately crash the Nokia phone business and the sell Nokia to Microsoft. This was because there was a clause that the bonuses are paid full if Elop is removed from CEO position because Nokia is sold and no such clause was included for the previous CEO Olli-Pekka Kallasvuo. (book page 304)

Tempting story. Except. The contract was no different than any contract made for a CEO in United States. Nokia hired an US executive for a CEO and that accounted for an US executive-level contract. There was no “conspiracy part” in the contract. Bonuses are paid in such a case because the generic expectation is that CEO should not try to prevent sales in case the company is sold, neither should he be unrewarded because his term was prematurely ended. Standard procedure. (pages 305-307) Also: Elop would have made more money by keeping Nokia afloat instead of deliberately wrecking it and any rational creature would have done that. (page 309)

(There is another approach to that: Finnish newspaper Helsingin Sanomat mentions in its article that Elop would have made at least 30 million dollars from 2010 to 2013 – five million dollars more than the “bonus incentive” – by just staying within Microsoft, never coming to Nokia in the first place.) [5]

And the best part: The book also lists some other CEOs with similar incentives that we should then consider as bad (or worse?) as Elop (pages 308-309):

  • Torsten Heins – CEO of BlackBerry at the time – would’ve earned a bonus of 40 million euros – over twice the money made by Elop – by simply selling BlackBerry to highest bidder, no matter what price. Mr. Heins got “only half” of the bonus (yet still more than Elop did) when he was fired without selling BlackBerry, not that he didn’t try.
    Why Tomi hasn’t been blaming that he was “driven by the bonus”? BlackBerry (RIM at the time) was bigger than Apple or Samsung when Elop started.
  • If William Johnson – CEO of Heinz – gets fired because Heinz is sold (and it does not matter if he drives the sales himself or if Heinz is sold under the company market value), he’ll get 200 million dollars.
    Why is he not actively trying to wreck Heinz to the brim of sales? He has incetive 8 times that of Elop.
  • And as a one-order-of-magnitude-worse case we have the CEO of General Electric from year 2001: Jack Welch got 300 million when he was laid off – compared to that the bonus Elop got starts to sound small.

As a last thing that I cannot underline enough: Pekka Nykänen and Merina Salminen interviewed over a hundred people and I quote: “Our interviews did not give a single one – and we want to emphasize that not even one – indication that this [Elop being sent to Nokia to sell it to Microsoft] could have even been possible.” (book page 316)

And addition to this the book also drops base from most of his stories about how Nokia was winning with Symbian. Yet Tomi recommends the book as very well researched and accurate.

Way to go Tomi.


[1] https://twitter.com/tomiahonen/status/519773164109172736

[2] https://twitter.com/tomiahonen/status/519546154971721729

[3] http://communities-dominate.blogs.com/brands/2013/08/ballmer-aftermath-part-2-impact-to-nokia-especially-lumia-running-windows-phone.html

[4] http://communities-dominate.blogs.com/brands/2013/09/now-we-know-why-nokias-elop-had-a-25m-personal-bonus-clause-from-the-nokia-board-if-he-was-able-to-s.html

[5] http://www.hs.fi/sunnuntai/a1380341110125