Stephen Elop

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Stephen Elop
Stephen elop.jpg
Born (1963-12-31) 31 December 1963 (age 50)
Ancaster, Ontario, Canada
Occupation Executive Vice President, Devices & Services, Nokia Corporation

Stephen Elop (born 31 December 1963) is Executive Vice President, Devices & Services at Nokia.[1] He is also the former CEO of Nokia Corporation.[2] A Canadian citizen, Elop was the first non-Finn to be named CEO of Nokia, on 21 September 2010.[3][4] 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. During his tenure at Nokia, Elop was regularly featured on the 'worst CEO' lists such as those at Daily Finance, CNBC and Wealth Wire. 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.[5]

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.

Personal life[edit]

Elop was born in Ancaster, Ontario, Canada.[6] 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.[7]

Education[edit]

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.[8][9]

Career[edit]

Before Nokia[edit]

Elop was a director of consulting for Lotus Development Corporation before becoming CIO for Boston Chicken in 1992,[10][11] which filed for Chapter 11 bankruptcy in 1998.[12] In the same year, he joined Macromedia's Web/IT department[11] and worked at the company for seven years,[13] where he held several senior positions, including CEO from January 2005[14] for three months before their acquisition by Adobe Systems was announced in April 2005.[7][15]

He was then president of worldwide field operations at Adobe, tendering his resignation in June 2006 and leaving in December,[16] after which he was the COO of Juniper Networks for exactly one year from January 2007 – 2008.[11][17]

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.[18]

CEO of Nokia[edit]

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.[19]

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 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 began trading at 4.14 Euros, up 36% on the day. Elop's success in negotiating the sale of Nokia's struggling mobile device business to Microsoft has been described by many securities analysts as a significant victory for NOK shareholders, particularly when viewed in context of failed efforts by Blackberry or HP to secure value for handset business owned by those companies.

"Burning Platform" memo[edit]

After joining Nokia, Elop issued a company internal memo titled “Burning Platform”[20] which was leaked to the press.[21] 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.[22] 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.[23][24][25]

The Windows Phone strategy[edit]

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, but actually finished in January 2014, 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.".[26] After Elop was removed from post of CEO, Elop became chief of Nokia D&S Division and Nokia rushed to market three smartphones running on Android, announced in February 2014.

During his tenure, Elop faced vocal criticism from both industry specialists and employees.[27][28][29] 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.[30][31] 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.[27][32][33][34][35] 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.[35][36]

In the book The Decline and Fall of Nokia, author David J. Cord firmly refutes the idea that Elop was a Trojan Horse. He claims that all of Elop's decisions were logical when they were made, and he also cites the testimony of other Nokia executives who were part of those decision-making processes.[37]

Acquisition by Microsoft[edit]

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.[38]

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.[39] As of June 2013, Nokia's mobile phone market share had fallen from 23%[40] to 15%, their smartphone market share gone from 32.6%[41] to 3.3%,[42] and their stock value dropped by 85% since Elop's takeover.[43] 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.[44][45]

Bonus controversy[edit]

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.[46][47] The controversy was further fueled after it was revealed that his contract had been revised on the same day as the deal was announced.[48] 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.[49] 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.[50] 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.[51]

References[edit]

  1. ^ "Nokia Leadership Team". Retrieved 2 February 2014. 
  2. ^ "Nokia to sell Devices & Services business to Microsoft in EUR 5.44 billion all-cash transaction". Nokia. 2013-09-03. Retrieved 2013-09-03. 
  3. ^ "Nokian Kallasvuo sai potkut, seuraaja Microsoftilta". Helsingin Sanomat (in Finnish). September 10, 2010. Retrieved 10.9.2010. 
  4. ^ "Nokian toimitusjohtaja vaihtuu". Kauppalehti (in Finnish). September 10, 2010. Retrieved 10.9.2010. 
  5. ^ http://www.ft.com/intl/cms/s/3/3af49738-2146-11e3-8aff-00144feab7de.html#axzz2fKcZnoBu
  6. ^ "Bio: Stephen Elop". Bloomberg Businessweek. June 25, 2009. Retrieved 10 September 2010. 
  7. ^ a b ""Kenraali" Elop astuu Nokian johtoon". Helsingin Sanomat (in Finnish). September 10, 2010. Retrieved 10.9.2010. 
  8. ^ "Stephen Elop's profile". LinkedIn. Retrieved 10 September 2010. 
  9. ^ "Stephen Elop's Nokia Adventure". Business Week. June 2, 2011. Retrieved 2011-06-02. 
  10. ^ "Stephen Elop's profile on LinkedIn". Retrieved 2012-01-30. 
  11. ^ a b c "Who is Microsoft's new business division leader, Stephen Elop?". ComputerWorld. January 11, 2008. Retrieved 2011-20-17. 
  12. ^ "A Chicken Autopsy". Fool.com. 1998-10-07. 
  13. ^ "Stephen Elop". CrunchBase. n.d. Retrieved 2011-02-17. 
  14. ^ "MACROMEDIA NAMES STEPHEN ELOP CHIEF EXECUTIVE OFFICER; ROB BURGESS CONTINUES AS CHAIRMAN". Macromedia. January 19, 2005. Retrieved 2011-02-17. 
  15. ^ "How will Stephen Elop fare at Microsoft?". ComputerWorld. January 11, 2008. Retrieved 2011-02-17. 
  16. ^ "Adobe Announces Resignation of President, Worldwide Field Operations". Adobe Systems. June 15, 2006. Retrieved 2012-01-30. 
  17. ^ "Microsoft beware: Stephen Elop is a flight risk". SiliconBeat. January 11, 2008. Retrieved 2011-02-17. 
  18. ^ "Microsoft's big gamble with free Office". April 1, 2010. Retrieved 2011-11-21. 
  19. ^ "Nokia pays big bucks for Elop: Former Microsoft executive receives $6M signing bonus". GeekWire. March 11, 2011. Retrieved 2011-03-11. 
  20. ^ Elop, Stephen (2011-09-02). "Full Text: Nokia CEO Stephen Elop’s ‘Burning Platform’ Memo". TechEurope (The Wall Street Journal). Retrieved 2011-09-28. 
  21. ^ Zieler, Chris. "Nokia CEO Stephen Elop rallies troops in brutally honest 'burning platform' memo? (update: it's real!)". engadget.com. Retrieved 10 December 2012. 
  22. ^ "Nokia's burning platform". BBC UK. February 9, 2011. Retrieved 2011-11-21. 
  23. ^ http://www.hs.fi/sunnuntai/Mies+joka+teki+myyj%C3%A4n+ty%C3%B6n/a1380341110125?ref=hs-hitaat-e-1
  24. ^ http://mynokiablog.com/2013/09/30/helsingin-sanomat-on-stephen-elop/
  25. ^ Brief summary in English at "My Nokia Blog" translating Helsingin Sanomat newspaper story about Ollila reprimanding Elop about Memo and Elop himself admitted to the Nokia Annual Shareholder Meeting that the Burning Platfoms memo did damage Nokia smartphone sales. http://mynokiablog.com/2012/05/04/mnb-reader-generated-fact-checking-what-was-said-at-nokia-agm/
  26. ^ Cheng, Roger (2012-12-18). "Nokia on the edge: Inside an icon's fight for survival". CNET. Retrieved 2013-09-03. 
  27. ^ a b Hänninen, Jyri (3 September 2013). "Oliko Stephen Elop vain Microsoftin myyrä?". Helsingin Sanomat (in Finnish). Retrieved 26 September 2013. 
  28. ^ Garside, Juliette (1 April 2013). "Nokia's Stephen Elop: 'It's a point of disruption'". The Guardian. Retrieved 28 September 2013. 
  29. ^ Chapman, Matthew (5 July 2012). "Former Apple Exec Jean-Louis Gassée: Nokia Should Fire CEO Stephen Elop". International Business Times. Retrieved 26 September 2013. 
  30. ^ "Nokia CEO admits failure to foresee fast-changing industry". The Inquirer. 2012-06-18. 
  31. ^ "Nokia plans 10,000 layoffs, cuts second-quarter outlook". CNet News. 06-04-2012. 
  32. ^ "Nokia workers ask, is chief executive a Microsoft mole?". Global Post. 
  33. ^ "Nokia CEO Denies Being Trojan Horse, Another Former Microsoft Exec Appointed". DailyTech. 
  34. ^ "Nokia Consultant Says Stephen Elop, Windows Phone A Monumental Mistake". AppAdvice. 
  35. ^ a b "Nokia employees still worried that Elop is a Microsoft mole". 
  36. ^ "Nokia CEO Elop Denies Being "Trojan Horse" For Microsoft". Business Insider. 2011-02-13. 
  37. ^ Cord, David (April 2014). The Decline and Fall of Nokia. Helsinki: Schildts & Söderströms. pp. 283–286. ISBN 978-951-52-3320-2. 
  38. ^ "Nokia investors tell CEO their patience running thin". 05-07-2013. 
  39. ^ Terlep, Sharon; Berman, Dennis K.; Ovide, Shira (19 June 2013). "Microsoft Explored Deal for Nokia". The Wall Street Journal. Retrieved 20 June 2013. 
  40. ^ "Gartner Says Worldwide Smartphone Sales Soared in Fourth Quarter of 2011 With 47 Percent Growth". Gartner. 
  41. ^ Alvaro Guzman (2011-02-09). "Mobile sales soar as Nokia share falls". IT PRO. Retrieved 2013-09-14. 
  42. ^ "Microsoft Corporation (MSFT): Can Microsoft Turn Things Around?". Seeking Alpha. 2013-08-27. Retrieved 2013-09-14. 
  43. ^ "Nokia's 'CEO Stephen Elop' Experiment Fails". Yahoo! Finance. 2013-05-31. 
  44. ^ "Microsoft to buy Nokia phones unit". BBC. 03-09-2013. 
  45. ^ "Microsoft to acquire Nokia’s devices & services business, license Nokia’s patents and mapping services". Microsoft press release. 2013-09-03. Retrieved 2013-09-03. 
  46. ^ "Nokia boss Elop to make €18.8m from Microsoft deal". YLE News. 19 September 2013. Retrieved 28 September 2013. 
  47. ^ Kuittinen, Tero (24 September 2013). "Finnish media: Nokia pleads with Elop to accept smaller bonus – Elop claims he needs full $25M for his divorce". BGR. Retrieved 28 September 2013. 
  48. ^ "New Nokia twist - Elop's contract revised same day as Microsoft deal". YLE NEws. 24 September 2013. Retrieved 28 September 2013. 
  49. ^ Pietiläinen, Tuomo; Tyynysniemi, Matti (24 September 2013). "Nokia antoi väärää tietoa Stephen Elopin toimitus­johtajasopimuksesta". Helsingin Sanomat (in Finnish). Retrieved 26 September 2013. 
  50. ^ "HS: Nokia and Elop discuss smaller golden handshake package". YLE News. 25 September 2013. Retrieved 28 September 2013. 
  51. ^ "Elop enjoyed preferential tax status in Finland". YLE News. 20 September 2013. Retrieved 28 September 2013. 
Business positions
Preceded by
Olli-Pekka Kallasvuo
Nokia Corporation CEO
2010–2013
Succeeded by
Risto Siilasmaa