Photographer: Brent Lewin/Bloomberg
Qualcomm Board Members Draw Tepid Support From ShareholdersBy
Tally shows withheld votes climbed amid investor frustration
New chairman Henderson got 258 million in withheld category
Qualcomm Inc.’s vote tallies from its annual meeting show that the chipmaker’s board was re-elected with reduced support from shareholders, fallout from a failed hostile bid from Broadcom Ltd. that many investors wanted.
Directors were running unopposed at a meeting last week because Broadcom pulled an alternative slate of candidates after its acquisition attempt was blocked by the U.S. government. Qualcomm disclosed in a regulatory filing Thursday that the incumbent directors drew the support of 580 million to 781 million votes out of a total available of about 1.48 billion. The supporting votes were down from last year, when most company nominees got more than 1 billion votes each, and the number of shares withheld -- essentially a vote against -- from most directors jumped.
Chief Executive Officer Steve Mollenkopf drew 665.9 million supporting votes, with 171.8 million withheld from his nomination. Last year, only about 4 million votes were cast against him. Qualcomm’s new chairman, Jeff Henderson, faced 258 million withheld votes, compared with 580 million votes in his favor.
The polling details are a further indication of investors’ dissatisfaction with Qualcomm’s performance in recent years. Profits have been slashed by legal disputes and regulatory fines. Broadcom, whose bid was quashed on national-security grounds by U.S. President Donald Trump, had argued it would be a better steward of Qualcomm’s leading mobile-phone chip technology and would change a business model that some customers and government agencies think is unfair.
To fight off Broadcom, Mollenkopf and his team committed to new earnings targets, pledged to close the acquisition of NXP Semiconductors NV and promised that legal setbacks will be reversed in court over time.
Two days ahead of the originally scheduled annual meeting, Broadcom looked to be in a position to win a majority of Qualcomm’s board seats, according to information obtained by Bloomberg at the time. Mollenkopf and Chairman Paul Jacobs has some of the lowest vote counts at that point. Jacobs was stripped of the chairman’s role during the Broadcom fight and then ousted from the board when he said he was seeking to take the company private.
Mollenkopf, Jacobs and the board had argued that Qualcomm was stronger as a stand-alone company and will see a profit boost when new wireless technology comes to market, it expands into new areas and the legal issues dogging the licensing business are resolved.
The San Diego-based chipmaker is unique in the industry in that it gets the majority of earnings from licensing technology. The company owns patents that underpin the fundamentals of all modern high-speed data cellular systems, meaning it gets a royalty for every smartphone sold, regardless of whether a device uses Qualcomm’s chips.
Hanging over the company is its licensing dispute with Apple Inc. The two are locked in a web of lawsuits that make take years to resolve. Apple’s decision to withhold license payments is costing Qualcomm about $2 billion a year in revenue, analysts have estimated. Regulators also have fined the company after accusing it of abusing its market-leading position in mobile chips.