(Bloomberg) -- Qualcomm Inc.’s top executives will be eligible to receive cash severances if they’re fired after a change in control of the firm, reversing a long-standing policy of not providing such payments for senior managers.
Executive vice presidents and higher-ranked employees are entitled to 1.5 times their salary and annual bonus, and a payment to cover health benefits for a period of time, according to a regulatory filing Friday from the San Diego-based chipmaker. Chief Executive Officer Steve Mollenkopf would get twice his salary and bonus.
The executives would also receive any unvested equity awards, with some depending on the firm’s stock performance. Qualcomm’s previous termination terms for top bosses didn’t specifically include promises of severance payments.
The new plan will help ensure that Qualcomm has the “continued attention and dedication of these executive officers,” according to the filing.
The policy mirrors the severance plan Qualcomm adopted in December for all employees below the rank of executive vice president as it faced a hostile takeover attempt by Broadcom Ltd. The plan, which said workers would get payouts based on their salary, rank and tenure if they were fired following a change in control, would make it more expensive for an acquirer to make sweeping changes.
Broadcom’s bid was blocked in March by an executive order from President Donald Trump. But even with that win, Qualcomm faces a number of woes, including costly legal battles with regulators and key customer Apple Inc. over its lucrative licensing business, waning market share and a stock price that’s far below below the $80-range where it once traded. The shares closed at $59.08 on Thursday in New York.
While many large public U.S. companies give executives severance of as much as three times their annual salary and bonus if they’re terminated following an acquisition, many of the country’s biggest tech firms, including Apple and Alphabet Inc., don’t have such policies.
©2018 Bloomberg L.P.