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The Board of Directors (the “Board”) of QUALCOMM Incorporated (the “Company” or “QUALCOMM”) has the responsibility to organize its functions and conduct its business in the manner it deems most effective and efficient, consistent with its duties of good faith, due care and loyalty. In that regard, the Board has adopted a set of flexible policies to guide its governance practices in the future. These practices, set forth below, will be regularly re-evaluated by the Board’s Governance Committee in order to continue serving the best interests of the Company’s stockholders. Accordingly, the summary of current practices is not a fixed policy or resolution by the Board, but merely a statement of current practices that is subject to continuing assessment and change.
The Board oversees the exercise of corporate powers and the Company's business affairs to ensure that they are managed to meet the Company's stated goals and objectives. The Board recognizes its responsibility to engage, and provide for the continuity of, executive management that possesses the character, skills and experience required to attain the Company's goals and to ensure that nominees for the Board of Directors possess appropriate qualifications and reflect a reasonable diversity of backgrounds and perspectives. Board members represent the collective interests of all stockholders of the Company and will act in good faith, with due care and in a manner he or she reasonably believes to be in the best interests of the Company. Consistent with their fiduciary duties and the Company’s Code of Business Conduct, Board members are expected to maintain the confidentiality of the deliberations of the Board and its committees.
To fulfill its role and responsibilities, the Board shall:
1. Size of the Board
The Board, through the Governance Committee, will regularly evaluate the size of the Board. Although the actual number will vary from time to time, generally the Board will range between nine and fifteen members. A significant majority of the Board are and will continue to be independent directors.
2. Board Member Criteria
The Governance Committee is responsible for reviewing the appropriate skills and characteristics required of Board members in the context of prevailing business conditions and composition of the Board. The qualifications and criteria considered in the selection of director nominees have the objective of assembling a Board that brings to the Company a variety of perspectives and skills derived from high quality business and professional experience. Those criteria and qualifications include both those set forth in the charter of the Governance Committee, as well as the following:
3. Board Definition of What Constitutes Independence for Non-Employee Directors
No relationship between any non-employee Board member and the Company should be of a nature that could compromise the independence of any Board member in governing the affairs of the Company. The determination of what constitutes independence for a non-employee Board member in any individual situation shall be made by the Board of Directors in light of the totality of the facts and circumstances relating to such situation and in compliance with the requirements of the applicable listing standards of the principal exchange on which the Company's securities are listed and other applicable rules and regulations.
4. Procedure for Selecting New Director Candidates, Stockholder Nominations
The Board is responsible for selecting its members, subject to stockholder approval, but delegates the screening process to the Governance Committee. The Governance Committee will review a reasonable number of candidates for director recommended by a single stockholder who has held over 1% of the Company's stock for over one year and who satisfies the notice, information and consent provisions set forth in the Company's Bylaws. Candidates so recommended will be reviewed using the same process and standards for reviewing Board recommended candidates. A stockholder wishing to formally nominate an individual for election to the Board at the Company's annual meeting of stockholders must do so by following the procedures described in the Bylaws. This process is separate and distinct from the "proxy access" process in the Bylaws.
5. Extending the Invitation to a Potential New Director to Join the Board
Upon concurrence of the Board, invitations to join the Board will generally be extended on behalf of the Board by the Chairman of the Board. Other Board members may participate as appropriate.
The Board shall appoint the Chairman of the Board. The Chairman is not required to be an independent director.
In addition to matters addressed elsewhere, the Chairman shall have the following responsibilities and authority:
7. Lead Independent Director
At all times when the Chairman is not an independent director, the Board shall have a Lead Independent Director” who shall be an “independent” director. In the event the Chairman is an independent director and the Board elects not to have a Lead Independent Director, the Chairman shall have the responsibilities and authority (as applicable) of the Lead Independent Director set forth in the following paragraph. At or before each Annual Meeting of the Board, which follows immediately after the Annual Meeting of Stockholders, (i) the Governance Committee shall recommend the Board member who would serve as Lead Independent Director for the next term, and (ii) the Lead Independent Director shall be elected by a vote of the independent members of the Board. An individual shall serve as the Lead Independent Director for a one-year period, commencing with the Annual Meeting of the Board. In general, the Board expects that a Lead Independent Director will serve two consecutive terms, but the independent members of the Board may extend a Lead Independent Director’s length of service (on a year by year basis) up to four consecutive terms. No Lead Independent Director shall serve more than four consecutive terms.
In addition to matters discussed elsewhere, the Lead Independent Director shall have the following responsibilities and authority:
8. Directors Who Change Their Job Responsibilities
A Board member, including the Chief Executive Officer, who experiences material changed circumstances that could affect his or her performance as a Board member should submit a written notice of such changed circumstances to the Governance Committee. That Committee shall determine whether such changed circumstances could pose a conflict of interest, diminish the Board member’s effectiveness as a Board member
, or otherwise be detrimental to the Company, and shall evaluate the appropriateness of that Board member’s continued Board membership under the new circumstances. If the Governance Committee believes that it is not appropriate for the Board member to continue his or her Board membership, the Governance Committee shall so report to the Board and make a recommendation that the Board member tender his or her resignation, and that the Board accept the tendered resignation. In such a case, the Board in its discretion will determine whether such member should continue to serve as a Board member.
9. Other Directorships
A Board member who has received an invitation to join another company’s board shall inform the Chairman of the Governance Committee (or another Governance Committee member if such Board member is the Chairman) prior to accepting such an offer. The Board member considering such an offer shall provide to the Governance Committee such information about the company making the offer as the Governance Committee shall request. The disinterested members of the Governance Committee shall then determine whether, in their view, it is appropriate for the Board member to accept such an offer. If the Board member disagrees with the finding of the Governance Committee that acceptance of such an offer is inappropriate, he or she may request that the full Board review the finding of the Governance Committee. If a Board member decides to accept such an offer after an adverse determination by the Governance Committee, and if the decision of the Governance Committee has been reviewed and approved by the Board, such Board member shall, immediately prior to accepting such offer, tender his or her resignation. Failure to tender a resignation pursuant to the terms of this policy shall be grounds for removal of such Board member for cause. Factors the Governance Committee and Board may consider in determining the appropriateness of the Board member accepting such an offer include the following:
Among the other criteria listed under “Board Member Criteria” above, the other boards on which a nominee serves may also influence the Governance Committee’s determination as to whether to recommend a nominee for election or re-election to the Board. The policies set forth above in this paragraph 9 shall not apply to service on the boards of directors of charitable non‑profit corporations or to companies which are affiliates (such as subsidiaries) of companies (a) on whose board of directors the Board member served either (i) at the time this policy was adopted, or (ii) at the time of his or her initial election to the Board, or (b) for which service as a Board member has been subsequently approved pursuant to this policy.
No Board member shall serve on the board of directors of more than five public companies (including QUALCOMM); provided, however, if a Board member is currently serving as an executive officer of a public company or in a senior management capacity at a large entity (such as a university or national non-profit organization), then a Board member may serve on the board of directors of no more than four public companies (including QUALCOMM). In the event a Board member serving on the board of directors of five public companies in compliance with this paragraph thereafter commences service as an executive officer of a public company or in a senior management capacity at a large entity, such Board member shall have 12 months to reduce the number of public company boards on which he or she serves to no more than four (including QUALCOMM).
10. Term Limits/Retirement Age
No term limits or retirement age for Board members have been established. The Board will evaluate each Board member’s effectiveness during his or her prior term before nominating such Board member for re‑election.
Recognizing the need to balance the benefits of continuity of Board composition with the periodic injection of fresh perspectives provided by new members, after a non-employee Board member has served on the Board for nine years (a “Nine-Year Director”), the Lead Independent Director and Chairman will discuss with that Nine-Year Director the anticipated future contributions to the Board resulting from the Nine-Year Director’s continued service and the need for Board rejuvenation. If the Nine-Year Director continues to serve on the Board, the Lead Independent Director and Chairman will have additional discussions with that Board member regarding his or her anticipated future contributions and the need for Board rejuvenation, such additional discussions to take place at times considered appropriate by the Lead Independent Director and Chairman, but at least every three years.
11. Majority Voting
As set forth in the Bylaws, other than in a Contested Election (as defined in the Bylaws), any incumbent nominee for director who receives a greater number of "withhold" votes (ignoring abstentions and broker non-votes) than votes "for" his or her election shall promptly tender his or her resignation from the Board and all committees thereof. As set forth in the Bylaws, the Governance Committee shall assess the appropriateness of such nominee continuing to serve as a Board member and shall recommend to the Board the action to be taken with respect such tendered resignation.
12. Director Resignations, Retirements and Refusals to Stand for Re-Election
A Board member who wishes to resign or retire or refuse to stand for re-election to the Board must notify the Company through written notice submitted to the Corporate Secretary of the Company.
1. Frequency of Board Meetings; Attendance
Currently, the Board has at least four regular meetings each year, with additional meetings as required or otherwise deemed appropriate. The Board considers its current meeting schedule to be adequate, but the number of regular meetings may be adjusted as necessary to meet changing conditions and needs. A calendar of Board meetings will be developed and circulated as far in advance as practicable. Members are expected to attend all meetings barring special circumstances.
2. Selection of Agenda Items for Board Meetings
The Chairman, together with the Chief Executive Officer and appropriate members of management, develops the agenda for Board meetings in collaboration with the Lead Independent Director. The agenda is circulated in advance of the meeting and Board members may suggest additional items for consideration.
3. Board Member Orientation; Continuing Education
Orientation materials will be made available and appropriate meetings will be held to acquaint new Board members with the business, history, current circumstances, key issues and top managers of the Company. The Board has assigned the responsibilities for developing such orientation materials to the Governance Committee. Board members are encouraged to participate in continuing education programs related to director duties and responsibilities. The Company, upon the approval of the Chairman of the Governance Committee, will reimburse reasonable costs and expenses of attendance at continuing education programs.
4. Board Materials Distributed in Advance
As much information and data as practical on the meeting agenda items and the Company's financial performance shall be sent to Board members in advance of meetings.
5. Board Access to Senior Management and Outside Advisors
All Board members shall have access to senior management, with the expectation that such contact would be minimally disruptive to the business operations of the Company. The Chief Executive Officer is encouraged to invite to Board meetings senior managers who can provide additional insight into business matters being discussed and those with high future potential who should be given personal exposure to members of the Board.
It is normally expected that information regarding the Company's business and affairs will be provided to the Board by the Company's management and the Company's outside advisors. However, the Board (as an entity) has the authority to retain and consult with outside financial, legal or other advisors of its choice as it deems appropriate, with funding provided by the Company.
6. Executive Sessions of Outside Directors
At each meeting of the Board, the agenda shall include time at the end of the meeting for an executive session with only independent Board members. The executive sessions shall be chaired by the Chairman (if the Chairman is an independent director) or the Lead Independent Director. In advance of such meetings the Chairman (if an independent director) and the Lead Independent Director shall communicate with non‑employee Board members to develop an agenda of issues for discussion in the executive session.
1. Number of Committees
The present standing Board committees are: the Audit Committee, the Compensation Committee, and the Governance Committee. Members of all standing committees shall be “independent” under applicable guidelines. The Board considers its current committee structure to be appropriate but the number and scope of committees may be revised as appropriate to meet changing conditions and needs.
2. Frequency and Length of Committee Meetings
Committee chairpersons may call meetings when they deem it necessary. Committee meetings may be as frequent and as long as needed.
3. Committee Agenda
The agenda for committee meetings is developed by committee Chairpersons in consultation with appropriate members of management. The agenda for each meeting is circulated in advance of the meeting and committee members may suggest additional items for consideration.
4. Assignment and Rotation of Committee Members
The Governance Committee is responsible for reviewing and recommending to the Board the assignment of Board member to various committees, it being the goal of the Company that each independent Board member serve on at least one Board committee. This committee will also recommend to the Board, subject to applicable membership requirements and as practical, an appropriate rotation process to ensure diversity of Board member experience and variety of exposure to the affairs of the Company.
1. Selection of the Chairman of the Board and the Chief Executive Officer
The Board elects the Chairman of the Board and the Chief Executive Officer in the manner and based on the criteria that it deems appropriate and in the best interests of the Company given the circumstances at the time of such election.
2. Formal Evaluation of the Chief Executive Officer
Each year, the Chairman and the chairpersons of the Governance Committee and the Compensation Committee will conduct a formal evaluation of the Chief Executive Officer's performance based on appropriate quantitative and qualitative criteria.
3. CEO Succession Planning
The Chief Executive Officer will annually review succession planning with the Governance Committee, and provide that Committee, on behalf of the Board, with a continuing current recommendation as to succession in the event of the Chief Executive Officer’s termination of employment, disability or death.
4. Board Interaction with Institutional Investors, the Media and Customers
Subject to the authority and responsibilities of the Chairman and the Lead Independent Director (as addressed above), the responsibility for communications and relationships on behalf of the Company with institutional investors, the media and customers should be management’s.
5. Assessing the Performance of the Board and Directors
The Board will conduct an annual assessment of its overall effectiveness and performance.
In addition, at least every three years, in conjunction with the Governance Committee’s review of director nominees, the Governance Committee will conduct an annual assessment of the overall effectiveness of each individual Board member.
6. Board Compensation Review
Each year, the Compensation Committee of the Board will review the Board’s compensation in relation to its peer companies and, as appropriate, other companies. Any material changes in Board compensation will be recommended by the Compensation Committee for approval by the Board, subject to any budgets or other limitations established from time to time by the Board.
7. Code of Business Conduct
Members of the Board shall act at all times in accordance with the requirements of the Company's Code of Business Conduct, which shall be applicable to each Board member in connection with his or her activities relating to the Company. This obligation shall at all times include, without limitation, adherence to the Company's policies with respect to conflicts of interest, compliance with applicable governmental laws, rules and regulations, and prompt internal reporting of any violations of the Code of Business Conduct. Any waiver of the requirements of the Code of Business Conduct with respect to any individual Board member shall be reported to, and be subject to the approval of, the Board. The Board expects Board member (as well as officers and employees) to acknowledge their understanding of, and adherence to, the Code of Business Conduct on an annual basis.
1. Stock Ownership Guidelines for Directors
Non-employee Board members are required to hold a number of shares of the Company’s common stock with a value equal to five times the annual cash retainer for Board service paid to U.S. residents. Non-employee Board members are required to achieve this ownership guideline within five years of joining the Board. In addition to the preceding ownership guidelines, all Board members are expected to own shares of the Company’s common stock within one year of joining the Board.
2. Stock Ownership for Executive Officers
The Company’s stock ownership guidelines for its executive officers are determined as a multiple of the executive’s base salary, with the size of the multiple based on the individual’s position. The guideline for the Company’s Chief Executive Officer is set at six times annual base salary. The guideline for the Company’s President is set at three times annual base salary. The guideline for the other persons who are designated as executive officers for purposes of Section 16 of the Securities Exchange Act is set at two times annual base salary. The guidelines are initially calculated using the executive’s base salary as of the date a person becomes an executive officer. The guidelines are re-calculated whenever an executive’s base salary changes. Executive officers are required to hold a number of shares of the Company’s common stock with a value equal to the stock ownership guideline for their position. Executive officers are required to achieve this ownership guideline within five years of becoming an executive.
3. Implications of Non-Compliance
In the event an executive officer or non-employee Board member does not achieve the applicable stock ownership guideline by the applicable deadline, he or she will be required to retain an amount equal to one hundred percent of the net shares received upon payment of any deferred or restricted stock units counted toward the applicable guideline until the guideline has been achieved and fifty percent of the net shares received upon payment of any other equity award or upon option exercise until the applicable guideline has been achieved. “Net shares” are those shares that remain after shares are sold or netted to pay any withholding taxes and, in the case of stock options, the exercise price. This requirement to retain all or a portion of net shares would also apply in the event the Company’s common stock price declines, or a change in covered class, causes the individual’s previous ownership to fall short of the guideline.
Board members are encouraged to attend annual meetings of stockholders and should attend absent unavoidable conflicting personal or professional commitments.
Stockholders of the Company should be provided a means of communicating with the members of the Board. Stockholders wishing to communicate with one or more particular member(s) of the Board should be directed to provide their communication to the General Counsel. The General Counsel may, in his discretion, screen commercial, substantially duplicative, frivolous, threatening or communications that are, in his judgment, otherwise inappropriate. Subject to the foregoing, upon receipt of stockholder communications for the Board, a Committee of the Board or one or more Board member(s), the General Counsel should direct the communication to the appropriate members of the Board. The General Counsel should maintain records of communications received and the disposition of such communication.
As amended effective May 7, 2018.