Stephen Elop, Nokia’s executive VP of Devices & Services (and former CEO), is one of five candidates to make Microsoft’s shortlist to succeed Steve Ballmer as CEO, according to Reuters sources.

The Canadian (pictured) has strong links with Microsoft having been president of the company’s business division before taking the helm at Nokia in 2010. He subsequently drove the Finnish company’s move towards Microsoft’s Windows Phone as its main smartphone platform.

Elop stepped down from his role as Nokia CEO in September after the proposed €5.4 billion acquisition of Nokia’s handset business by Microsoft was announced, although he remains a member of the Nokia Leadership Team. He is in line for a payout of almost €19 million when he moves to Microsoft.

The mobile-related experience Elop gained at Nokia could boost Microsoft’s mobile strategy, while his familiarity with both companies is likely to help the integration of Nokia’s Devices & Services unit into Microsoft if the deal goes through.

Elop is believed to be joined on the shortlist by Ford CEO Alan Mulally, along with three internal candidates, including former Skype CEO Tony Bates, who now heads the company’s business development, and Sataya Nadella, head of Microsoft’s cloud and enterprise division. It is unclear who the fifth candidate is.

The sources said the final decision is likely to take a few more months.

Steve Ballmer announced in August that he would retire within the next year. He succeeded Bill Gates as CEO in 2000. The list of candidates for the CEO role apparently ran to more than 40 names at one point, according to Reuters.

Microsoft has been losing ground to Apple and Google in the mobile space, as Ballmer focused on devices such as the Surface tablet and Xbox gaming console, and offering software over the internet.

As a result, there has been pressure from Microsoft investors for the company to appoint a turnaround expert as CEO. Mullaly would fall into that category, having saved Ford from a US government bailout in 2009.

Investors have also suggested Microsoft co-founder Bill Gates should step down as chairman as his presence is a barrier to more radical reform in the company.

“What they need is a leader with a new direction – a visionary who can bring back innovation and provide products people are willing to spend money on,” wrote Jack Gold in an earlier research note.

Since launching Windows Phone 8 in October 2012, as well as entering the strategic partnership with Nokia and reaching agreements with Samsung and HTC to launch Windows Phone 8 devices, the viability of having a third mobile OS ecosystem to seriously challenge Android and iOS has still to be proven.

However, according to Strategy Analytics, Windows Phone doubled its share of the global mobile market to 4 per cent in the third quarter of 2013, providing evidence of some progress.

The OS has been boosted by the recent arrival of big-name apps such as Instagram and Vine. The relative lack of big name apps has been cited as holding back the progress of Windows Phone compared to iOS and Android.