What is the purpose of the new Qualcomm Executive Officer Change in Control Severance Plan?

The primary purpose of the plan is to ensure the continued attention and dedication of Qualcomm's key executive officers, facilitate recruitment efforts, and provide termination benefits upon a change in control of the company. This is intended to protect the company and its stockholders from potential loss or distraction of executive talent during uncertain periods.

Who is covered by this severance plan?

The plan covers Qualcomm's Chief Executive Officer, President, and Executive Vice Presidents. These are the senior-most executives of the company.

What are the severance benefits for an eligible executive if their employment is terminated under specific circumstances after a change in control?

In the event of termination by the company without 'cause' or by the executive for 'good reason' (as defined in the plan), executives will receive a severance payment of two times their annual base salary and target bonus for the CEO, and 1.5 times for other eligible executives. They will also receive a pro-rata target bonus for the year of termination and continued COBRA health premium payments.

How does this plan affect outstanding equity awards?

For performance stock units outstanding at the plan's adoption, they will vest in full upon a qualifying termination following a change in control. The ROIC performance metric will be deemed achieved at the target level, while the TSR performance metric will continue to be measured based on actual performance.

QCOM 8-K: Leadership Changes

Summary

Qualcomm Incorporated (QCOM) announced on May 24, 2018, the adoption of the Qualcomm Incorporated Executive Officer Change in Control Severance Plan. This plan is designed to retain key executive talent by providing severance benefits in the event of a change in control of the company, which is a common practice among peer companies. The goal is to mitigate the risk of executive distraction or departure during periods of uncertainty, thereby protecting shareholder interests. The plan covers the CEO, President, and Executive Vice Presidents, offering enhanced severance packages that include salary and bonus multiples, pro-rata bonus payments, and continued health coverage. Notably, it also modifies outstanding equity awards to provide for full vesting upon a qualifying termination following a change in control, aligning the treatment of assumed and non-assumed awards. This initiative aims to ensure leadership stability and facilitate recruitment, ultimately supporting the company's strategic objectives.

Key Highlights

1Qualcomm adopted an Executive Officer Change in Control Severance Plan effective May 24, 2018.
2The plan aims to retain key executives by providing severance benefits during a change in control scenario.
3Eligible participants include the CEO, President, and Executive Vice Presidents.
4Severance includes 1.5 to 2 times annual base salary and target bonus, pro-rata target bonus, and COBRA premium continuation.
5The plan modifies outstanding equity awards, allowing for full vesting of performance stock units upon a qualifying termination after a change in control.
6Performance metrics for equity awards are adjusted: ROIC is deemed achieved at target, and TSR is based on actual performance.
7The plan includes provisions to avoid excise taxes under Section 280G of the IRS code if it results in a better after-tax position for the executive.

QUALCOMM INC/DE 8-K Report, Executive Changes (May 25, 2018)

Summary

Key Highlights

Frequently Asked Questions