Qualcomm Sets Three-Year Investor Rule for Proxy Nominationsby
Shareholder threshold aimed at deterring short-term activists
Qualcomm conducting strategic review of its operations
Qualcomm Inc. has changed its proxy process to require that shareholders keep their stake for at least three years before pushing nominees for the chipmaker’s board, a move aimed at making it harder for short-term investors to influence management and strategy.
Shareholders, or groups of as many as 20 shareholders, with at least a 3 percent stake in Qualcomm held “continuously for at least three years” can nominate board candidates and include materials backing their nominees in the company’s proxy information, the San Diego-based company said Friday in a filing. The shareholders can contest as many as one-fifth of the board slots, according to the filing.
Qualcomm, whose mobile chips dominate the smartphone market, has attracted the interest of activist investors amid a 36 percent decline in its stock this year. Sales have declined the past two quarters and the company is under investigation on three continents. In July, activist investor Jana Partners LLC signed an agreement with Qualcomm not to start a proxy fight until 2017 in return for a shakeup of the board and a strategic review of the companies operations and cost cuts.
The latest changes to the proxy rules may help Qualcomm fend off any further challenges from activist investors as Chief Executive Officer Steve Mollenkopf seeks to turn the chipmaker around. Some investors have argued that regulators might relent if Qualcomm gave up a bit of its dominance in the smartphone-chip market by breaking itself in two.
The new rules will take effect with the company’s 2017 annual meeting, Qualcomm said.