||The neutrality of this article is disputed. (November 2013)|
31 December 1963 |
Ancaster, Ontario, Canada
|Occupation||Executive Vice President, Devices & Services, Nokia Corporation|
Stephen Elop (born 31 December 1963) is the former CEO of Nokia Corporation. A Canadian citizen, Elop was the first non-Finn to be named CEO of Nokia, on 21 September 2010. During the 3 years Elop was Nokia CEO, Nokia revenues fell 40%, Nokia profits fell 95%, Nokia market share collapsed in smartphones from 34% to 3.4%, Nokia's credit rating went from A to junk, Nokia's share price dropped 60% in value and Nokia's market capitalization lost 13 Billion dollars in value. The Financial Times calculated that Nokia shareholders ended up paying Elop a bonus of 1 million Euros for every 1.5 Billion in market capital that Elop was able to destroy while Nokia CEO.
On 3 September 2013, Nokia announced that Elop was removed from his posts as CEO and President of Nokia and he was resigning from the Nokia Board of Directors, and Nokia Chairman Risto Siilasmaa would take over running Nokia. At the same time, it was announced that Microsoft had agreed to buy Nokia's troubled mobile phone and devices business for €5.4bn ($7.2bn; £4.6bn). Elop would be moved to Microsoft as part of that transition where he would become an Executive Vice President.
Elop was born in Ancaster, Ontario, Canada. In his spare time, he is an avid recreational pilot. He filed for divorce from his wife Nancy Elop, with whom he has five children, four girls (including triplets) and a boy.
From 1981, Elop studied computer engineering and management at McMaster University, Hamilton, Ontario, graduating second in his class with a bachelor's degree in 1986. During that time he helped lay 22 kilometers of Ethernet cable around campus to create one of the first Internet networks in Canada.
Elop was a director of consulting for Lotus Development Corporation before becoming CIO for Boston Chicken in 1992, which filed for Chapter 11 bankruptcy in 1998. In the same year, he joined Macromedia's Web/IT department and worked at the company for seven years, where he held several senior positions, including CEO from January 2005 for three months before their acquisition by Adobe Systems was announced in April 2005.
He was then president of worldwide field operations at Adobe, tendering his resignation in June 2006 and leaving in December, after which he was the COO of Juniper Networks for exactly one year from January 2007 – 2008.
From January 2008 to September 2010, Elop worked for Microsoft as the head of the Business Division, responsible for the Microsoft Office and Microsoft Dynamics line of products, and as a member of the company's senior leadership team. It was during this time that Microsoft's Business Division released Office 2010.
CEO of Nokia
In September 2010, it was announced that Elop would take Nokia's CEO position, replacing Olli-Pekka Kallasvuo, and becoming the first non-Finnish director in Nokia's history. On 11 March 2011 Nokia announced that it had paid Elop a $6 million signing bonus, “compensation for lost income from his prior employer," on top of his $1.4 million annual salary.
During Elop's tenure, Nokia annual revenues fell 40% from 41.7 Billion Euros per year to 25.3 Billion Euros per year. Nokia profits fell 92% from 2.4 Billion Euros per year to 188 Million Euros per year. Nokia handset sales fell 40% from 456 million units per year to 274 million units per year. Nokia's A ranking among all three ratings agencies was downgraded repeatedly all through his tenure with no upgrades, and when he left office all three ratings agencies rated Nokia as junk. Nokia's Fortune Global 500 ranking was 120th largest corporation on the planet when Elop started, which has fallen each year during his tenure and was down to 274th by the time he exited the company. If the proposed sale of the handset unit to Microsoft is approved by Nokia shareholders, the remaining revenues will mean that Nokia will have fallen out of the Fortune Global 500. Nokia share price which was at 7.12 Euros on the day Elop was hired, had fallen to 81% to a bottom level of 1.44 Euros two years later, after which it only recovered as rumors emerged that Microsoft may be buying Nokia or parts of it.
"Burning Platform" memo
After joining Nokia, Elop issued a company internal memo titled “Burning Platform” which was leaked to the press. The memo likened the 2010 situation of Nokia in the smartphone market to a person standing on a burning oil platform ("platform" being a reference to the name given to operating systems such as Symbian, Apple iOS and Google Android). By some in the media, the memo was seen as a wake-up call for Nokia. Others saw it immediately as a bad move by Nokia's CEO. The memo has since been called the most damaging memo in corporate governance. Nokia's Chairman Jorma Ollila reprimanded Elop for it at a Board Meeting.
The Windows Phone strategy
In February 2011, Elop officially announced the new strategy for Nokia, which included the discontinuation of both of their in-house mobile operating systems, shifting its smartphone strategy to Microsoft's Windows Phone. The phase-out of Symbian was to be carried out during the following years, expecting it to be finalized by 2016, and plans for any MeeGo devices beyond the Nokia N9 were scrapped. The first Nokia Windows Phone smartphone shipped in November 2011, the Nokia Lumia 800, was made in the form of a device design identically similar (only an additional camera button was added) to the Nokia N9, the first MeeGo mobile.
Elop stated the reason for switching to Windows instead of Android: "the single most important word is 'differentiation'. Entering the Android environment late, we knew we would have a hard time differentiating."
During his tenure, Elop faced vocal criticism from both industry specialists and employees. In 2011, Elop announced that some 11,000 employees would have to be laid off as part of a plan to "restructure" Nokia's business, and in June 2012 it was announced that further 10,000 layoffs were in order and that several facilities would have to be closed down due to budget cuts. Some critics, especially in Finland, started to speculate that Elop could be a trojan horse, whose mission was to prepare Nokia for a future acquisition by Microsoft. When confronted with the theory by an anonymous attendee of the 2011 Mobile World Congress, Elop denied the speculation stating, "The obvious answer is, no. But however, I am very sensitive to the perception and awkwardness of that situation. We made sure that the entire management team was involved in the process [...] everyone on the management team believed this was the right decision," referring to Nokia's adoption of Microsoft's Windows Phone operating system.
Acquisition by Microsoft
In May 2013, after the two years that he had been granted for the transition to the Windows Phone platform, Elop was pressed by Nokia's shareholders about the lack of results compared to the competitors and the insufficient sales figures to secure the company's survival. During the annual general meeting, several shareholders voiced that they were running out of patience with Elop's efforts in putting Nokia back to the smartphone race. Elop replied that there was no turning back on his decision of adopting Windows Phone, while some analysts criticized Elop for closing doors to alternative strategies and going all-in with Microsoft's operating system. Some analysts speculated that Nokia had already lost the smartphone race to Samsung and Apple, and that if they were to regain their position in the market, it would have to be by means of low-end devices such as the Asha.
In June 2013, it was reported that Microsoft had been to advanced talks for buying Nokia, but the negotiations had faltered over price and worries about Nokia's slumping market position. As of June 2013, Nokia's mobile phone market share had fallen from 23% to 15%, their smartphone market share gone from 32.6% to 3.3%, and their stock value dropped by 85% since Elop's takeover. On September 3, 2013, it was announced that Microsoft had agreed to buy Nokia's mobile phone and devices business for 5.4 billion euros ($7.2bn; £4.6bn) and that Elop would stand down as Nokia's CEO to become Vice President of Microsoft's Devices & Services business unit.
A controversy arose around Elop receiving a €18.8 million bonus after Nokia sold its mobile phone business to Microsoft and he stepped down as the CEO. The controversy was further fueled after it was revealed that his contract had been revised on the same day as the deal was announced. Moreover, the chairman of Nokia's Board of Directors gave initially incorrect information about the contract to the public, and had to correct his statements later. Shortly before his departure from Nokia, Elop had filed for divorce, which he also cited as a reason to reject a renegotiation of the controversial bonus. Elop also enjoyed a preferential tax status in Finland, a 35% fixed-rate income tax irrespective of the size of income, while typical tax payers in Finland pay a progressive income tax.
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|Nokia Corporation CEO