DEF 14A 1 proxy2017.htm DEF 14A Document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO.    )
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[   ]  Soliciting Material Pursuant to Section 240.14a-12

QUALCOMM INCORPORATED

 (Name of Registrant as Specified In Its Charter)
 (Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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January 19, 2017

Dear Fellow Stockholder:
You are cordially invited to attend Qualcomm’s 2017 Annual Meeting of Stockholders (the Annual Meeting) on Tuesday, March 7, 2017. The meeting will begin promptly at 9:30 a.m. Pacific Time at the Irwin M. Jacobs Qualcomm Hall, 5775 Morehouse Drive, San Diego, California 92121. I invite you to arrive early at 8:30 a.m. to preview our product displays. We will begin the Annual Meeting with a discussion and vote on the matters set forth in the Notice of Annual Meeting of Stockholders, followed by presentations and a report on Qualcomm’s fiscal 2016 performance.
Whether or not you plan to attend the Annual Meeting, please vote as soon as possible. As an alternative to voting in person at the Annual Meeting, you may vote via the Internet, by telephone, or if you receive a paper proxy card in the mail, by mailing the completed proxy card. Voting by any of these methods will ensure your representation at the Annual Meeting.
Your vote is very important to us. I urge you to vote as our Board of Directors recommends.
Thank you for your support and continued interest in Qualcomm. I look forward to seeing you in San Diego at the Irwin M. Jacobs Qualcomm Hall on Tuesday, March 7, 2017.

Sincerely,

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Steve Mollenkopf
Chief Executive Officer


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5775 Morehouse Drive
San Diego, California 92121-1714
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On March 7, 2017
To the Stockholders of QUALCOMM Incorporated:
NOTICE IS HEREBY GIVEN that the 2017 Annual Meeting of Stockholders (Annual Meeting) of QUALCOMM Incorporated, a Delaware corporation (the Company), will be held at the Irwin M. Jacobs Qualcomm Hall, 5775 Morehouse Drive, San Diego, California 92121, on Tuesday, March 7, 2017 at 9:30 a.m. Pacific Time for the following purposes:

1.
To elect 11 directors to hold office until the next annual meeting of stockholders and until their respective successors have been elected and qualified.
2.
To ratify the selection of PricewaterhouseCoopers LLP as our independent public accountants for our fiscal year ending September 24, 2017.
3.
To approve, on an advisory basis, our executive compensation.
4.
To vote on a stockholder proposal to amend the proxy access provision of our Amended and Restated Bylaws, if properly presented at the Annual Meeting.
5.
To transact such other business as may properly come before stockholders at the Annual Meeting or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on January 9, 2017 as the record date for the determination of stockholders entitled to notice of and to vote at the Annual Meeting and at any adjournment or postponement thereof.
By Order of the Board of Directors,

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Donald J. Rosenberg
Executive Vice President,
General Counsel and Corporate Secretary
San Diego, California
January 19, 2017


TABLE OF CONTENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

i

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

ii

PROXY OVERVIEW
2017 ANNUAL MEETING OF STOCKHOLDERS (ANNUAL MEETING)
 
 
 
Date and Time
  
March 7, 2017
9:30 a.m. Pacific Time
Location
  
Irwin M. Jacobs Qualcomm Hall
5775 Morehouse Drive, San Diego, California 92121
Record Date
  
January 9, 2017
Voting
  
Stockholders of record as of the record date may vote via the Internet at www.proxyvote.com; by telephone at 1-800-690-6903; by completing and returning their proxy card; or in person at the Annual Meeting.
Date of First Distribution
of Proxy Materials
  
January 19, 2017
VOTING MATTERS AND BOARD RECOMMENDATIONS
 
 
 
 
 
 
 
Proposal
  
  
  
Board Recommendation
  
Page Reference
PROPOSAL 1
  
Election of Directors
  
FOR each Nominee
  
13
PROPOSAL 2
  
Ratification of the selection of PricewaterhouseCoopers LLP as our independent public accountants for our fiscal year ending September 24, 2017
  
FOR
  
19
PROPOSAL 3
  
Approval, on an advisory basis, of our executive compensation
  
FOR
  
21
PROPOSAL 4
 
Stockholder proposal to amend the proxy access provision of our Amended and Restated Bylaws
 
AGAINST
 
23

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DIRECTOR NOMINEES (SEE PAGE 13)
 
 
 
 
 
Name
 
Age
 
Director
Since
 
Occupation / Experience
 
Independent 
Barbara T. Alexander
 
68
 
2006
 
Current: Independent Consultant. Prior experience includes serving as a senior advisor for UBS and managing director of Dillon Read & Co., Inc.
 
X
Jeffrey W. Henderson
 
52
 
2016
 
Current: Advisory Director to Berkshire Partners LLC. Prior experience includes serving as CFO of Cardinal Health Inc.
 
X
Thomas W. Horton *
 
55
 
2008
 
Current: Senior Advisor to Warburg Pincus LLC. Prior experience includes serving as Chairman and CEO of American Airlines and Vice Chairman and CFO of AT&T Corporation.
 
X
Paul E. Jacobs
 
54
 
2005
 
Current: Executive Chairman and Chairman of the Board, QUALCOMM Incorporated. Prior experience includes serving as CEO of QUALCOMM Incorporated.
 
 
Ann M. Livermore
 
58
 
2016
 
Prior experience includes serving as former Executive Vice President of the Enterprise Business at Hewlett-Packard Company
 
X
Harish Manwani
 
63
 
2014
 
Current: Global Executive Advisor to Blackstone Private Equity group. Prior experience includes serving as COO of Unilever PLC.
 
X
Mark D. McLaughlin
 
51
 
2015
 
Current: Chairman and CEO, Palo Alto Networks, Inc. Prior experience includes serving as President and CEO of VeriSign, Inc.
 
X
Steve Mollenkopf
 
48
 
2013
 
Current: CEO, QUALCOMM Incorporated
 
 
Clark T. Randt, Jr.
 
71
 
2013
 
Current: President, Randt & Co. LLC. Prior experience includes serving as U.S. Ambassador to the People's Republic of China and as a partner at Shearman & Sterling, an international law firm.
 
X
Francisco Ros
 
66
 
2010
 
Current: Founder and President, First International Partners, S.L. Prior experience includes serving as the Secretary of State of the Government of Spain and executive management and board positions in telecommunications companies.
 
X
Anthony J. Vinciquerra
 
62
 
2015
 
Current: Senior Advisor to Texas Pacific Group. Prior experience includes serving as the Chairman, President and CEO of Fox Networks Group.
 
X

*     Presiding Director

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PROXY STATEMENT
In this document, the words “Qualcomm,” “the Company,” “we,” “our,” “ours” and “us” refer only to QUALCOMM Incorporated, a Delaware corporation, and its consolidated subsidiaries and not to any other person or entity.
MEETING INFORMATION
 
 
 
 
 
The Board of Directors (Board) of QUALCOMM Incorporated is soliciting your proxy for use at the Company’s 2017 Annual Meeting of Stockholders (Annual Meeting) to be held on Tuesday, March 7, 2017, at 9:30 a.m. Pacific Time and at any adjournment or postponement thereof.
VOTING RIGHTS AND OUTSTANDING SHARES
 
 
 
 
 
Only holders of record of common stock at the close of business on January 9, 2017 (Record Date) will be entitled to notice of and to vote at the Annual Meeting. At the close of business on the Record Date, we had 1,477,702,352 shares of common stock outstanding and entitled to vote. Each holder of record of common stock on the Record Date will be entitled to one vote for each share held on all matters to be voted upon. If no choice is indicated on the proxy, the shares will be voted as described in the section “How Your Shares Will Be Voted” below. All votes will be counted by an independent inspector of election appointed for the Annual Meeting, who will separately tabulate affirmative and negative votes, abstentions and broker non-votes.
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS
 
 
 
 
 
We are furnishing proxy materials to our stockholders primarily via the Internet under rules adopted by the U.S. Securities and Exchange Commission (SEC), instead of mailing printed copies of those materials to each stockholder. On January 19, 2017, we commenced mailing to our stockholders (other than those who previously requested electronic delivery or a full set of printed proxy materials) a Notice of Internet Availability of Proxy Materials containing instructions on how to access our proxy materials, including this proxy statement. The Notice of Internet Availability of Proxy Materials also provides instructions on how to access your proxy card to vote via the Internet.
This process is designed to expedite stockholders’ receipt of proxy materials, lower the cost of the Annual Meeting and help conserve natural resources. If you received the Notice of Internet Availability of Proxy Materials and would prefer to receive printed proxy materials, please follow the instructions included in the Notice of Internet Availability of Proxy Materials. If you have previously elected to receive our proxy materials electronically, you will continue to receive these materials via email unless you elect otherwise.
This proxy statement and our Annual Report on Form 10-K for fiscal year 2016 are available at http://www.qualcomm.com.
VOTING METHODS
 
 
 
 
 
If you are a stockholder with shares registered in your name, you may vote by one of the following three options depending on the method of delivery by which you received the proxy materials: 
•
Vote via the Internet. Go to the web address http://www.proxyvote.com and follow the instructions for Internet voting shown on the proxy card or the Notice of Internet Availability of Proxy Materials mailed to you or the instructions that you received by email.
•
Vote by Telephone. Dial 1-800-690-6903 and follow the instructions for telephone voting shown on the proxy card or the Notice of Internet Availability of Proxy Materials you received by mail.
•
Vote by Proxy Card. Complete, sign, date and mail the proxy card in the envelope provided. If you vote via the Internet or by telephone, please do not mail your proxy card.
If your shares are held by a broker, bank or other stockholder of record, in nominee name or otherwise, exercising fiduciary powers (typically referred to as being held in “street name”), please follow the instructions you receive from them. You may

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need to contact your broker, bank or other stockholder of record to determine whether you will be able to vote electronically via the Internet or by telephone.
PLEASE NOTE THAT IF YOUR SHARES ARE HELD BY A BROKER, BANK OR OTHER STOCKHOLDER OF RECORD AND YOU WISH TO VOTE AT THE ANNUAL MEETING, YOU MUST FIRST OBTAIN A LEGAL PROXY ISSUED IN YOUR NAME FROM THE RECORD HOLDER. OTHERWISE, YOU WILL NOT BE PERMITTED TO VOTE IN PERSON AT THE MEETING.
HOW YOUR SHARES WILL BE VOTED
 
 
 
 
 
Your shares will be voted in accordance with your instructions. If you do not specify voting instructions on your proxy, the shares will be voted as follows: 
Proposal
  
  
  
Vote
  
Page Reference
PROPOSAL 1
  
Election of Directors
  
FOR each Nominee
  
13
PROPOSAL 2
  
Ratification of the selection of PricewaterhouseCoopers LLP as our independent public accountants for our fiscal year ending September 24, 2017
  
FOR
  
19
PROPOSAL 3
  
Approval, on an advisory basis, of our executive compensation
  
FOR
  
21
PROPOSAL 4
 
Stockholder proposal to amend the proxy access provision of our Amended and Restated Bylaws
 
AGAINST
 
23
In the absence of instructions to the contrary, proxies will be voted in accordance with the judgment of the person exercising the proxy on any other matter properly presented at the Annual Meeting.
BROKER NON-VOTES
 
 
 
 
 
A broker non-vote occurs when a broker, bank or other stockholder of record, in nominee name or otherwise, exercising fiduciary powers (typically referred to as being held in “street name”) submits a proxy for the Annual Meeting, but does not vote on a particular proposal because that holder does not have discretionary voting power with respect to that proposal and has not received voting instructions from the beneficial owner. Broker non-votes (like abstentions) will be counted as present for purposes of determining the presence of a quorum, but will have no effect on the determination of whether a nominee or the proposal has received the vote of a majority of the shares of common stock present or represented by proxy and voting at the Annual Meeting. Under the rules that govern brokers who are voting with respect to shares held in street name, brokers have the discretion to vote those shares on routine matters, but not on non-routine matters. Routine matters include ratification of the selection of independent public accountants. Non-routine matters include the election of directors, advisory votes on executive compensation and stockholder proposals.
REVOCABILITY OF PROXIES
 
 
 
 
 
Any person giving a proxy pursuant to this solicitation has the power to revoke it at any time before it is voted. A proxy may be revoked by filing a written notice of revocation or a duly executed proxy bearing a later date with our Corporate Secretary at our principal executive offices, 5775 Morehouse Drive, N-520I, San Diego, California 92121-1714, or it may be revoked by attending the Annual Meeting and voting in person. Attendance at the Annual Meeting will not, by itself, revoke a proxy.

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PROXY SOLICITATION
 
 
 
 
 
We will bear the entire cost of the solicitation of proxies, including the preparation, assembly, printing and mailing of the Notice of Internet Availability of Proxy Materials, this proxy statement, the proxy card and any additional information furnished to stockholders. Copies of solicitation materials will be furnished to banks, brokerage houses, fiduciaries and custodians holding in their names shares of common stock beneficially owned by others to forward to such beneficial owners. We may reimburse persons representing beneficial owners of common stock for their costs of forwarding solicitation materials to such beneficial owners. In addition, we have retained Morrow Sodali to act as a proxy solicitor in conjunction with the Annual Meeting. We have agreed to pay that firm $10,000, plus reasonable out-of-pocket expenses, for proxy solicitation services. Solicitation of proxies by mail may be supplemented by telephone or personal solicitation by our directors, officers or other employees. No additional compensation will be paid to directors, officers or other employees for such services.
STOCKHOLDER PROPOSALS
 
 
 
 
 
The deadline for submitting a stockholder proposal for inclusion in our proxy materials for our 2018 Annual Meeting of Stockholders is September 21, 2017. Stockholder nominations for director that are to be included in our proxy materials under the proxy access provision of our Amended and Restated Bylaws (Bylaws) must be received no earlier than August 22, 2017 and no later than the close of business on September 21, 2017. Stockholder nominations for director and other proposals that are not to be included in such materials must be received no earlier than November 8, 2017 and no later than the close of business on December 8, 2017. Any such stockholder proposals or nominations for director must be submitted to our Corporate Secretary in writing at 5775 Morehouse Drive, N-520I, San Diego, California 92121-1714. Stockholders are advised to review our Bylaws, which contain additional requirements for submitting stockholder proposals and director nominations. See page 9 for further information.
HOUSEHOLDING
 
 
 
 
 
The SEC allows companies and intermediaries (such as brokers) to implement a delivery procedure called “householding.” Under this procedure, multiple stockholders who reside at the same address will receive a single copy of our proxy materials, including the Notice of Internet Availability of Proxy Materials, unless one of the stockholders has notified us that they want to continue receiving multiple copies. This practice is designed to reduce duplicate mailings and save printing and postage costs, as well as natural resources. Householding for bank and brokerage accounts is limited to accounts within the same bank or brokerage firm. For example, if you and your spouse share the same last name and mailing address and you and your spouse each have two accounts containing Qualcomm stock at two different brokerage firms, your household will receive two copies of the Qualcomm proxy materials, one from each brokerage firm. To reduce the number of duplicate sets of proxy materials your household receives, you may wish to enroll some or all of your accounts in our electronic delivery program at http://enroll.icsdelivery.com/qcom.
If you received a householded mailing this year and you would like to have separate copies of our Notice of Internet Availability of Proxy Materials and proxy materials mailed to you, please submit your request to Broadridge ICS, either by calling toll-free (866) 540-7095 or by writing to Broadridge ICS, Householding Department, 51 Mercedes Way, Edgewood, New York 11717. They will promptly send additional copies of our Notice of Internet Availability of Proxy Materials and proxy materials upon receipt of such request. Once you have received notice from your bank or broker that it will be householding communications to your address, householding will continue until you are notified otherwise or until you revoke your consent. Stockholders may revoke their consent at any time by contacting Broadridge ICS as provided above. Please note, however, that if you want to receive a paper proxy or voting instruction form or other proxy materials for purposes of this year’s Annual Meeting, you should follow the instructions included in the Notice of Internet Availability that was sent to you. If you received multiple copies of the proxy materials and would prefer to receive a single copy in the future or if you would like to opt out of householding for future mailings, you may contact Broadridge ICS as provided above.

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FINANCIAL INFORMATION
 
 
 
 
 
Attached as Appendix A is certain financial information from our Annual Report on Form 10-K for fiscal 2016 that we filed with the SEC on November 2, 2016. We have not undertaken any updates or revisions to such information since the date it was filed with the SEC. Accordingly, we encourage you to review Appendix A together with any subsequent information we have filed with the SEC and other publicly available information.
PERFORMANCE MEASUREMENT COMPARISON OF STOCKHOLDER RETURN
 
 
 
 
 
Attached as Appendix B is a graph that compares total stockholder return on our common stock since September 25, 2011 to two indices: the Standard & Poor’s 500 Stock Index (S&P 500) and the NASDAQ-100 Index (NASDAQ-100).
CORPORATE DIRECTORY
 
 
 
 
 
Attached as Appendix C is a listing of our executive officers and members of our Board.

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CORPORATE GOVERNANCE
CODE OF ETHICS AND CORPORATE GOVERNANCE PRINCIPLES AND PRACTICES
 
 
 
 
 
The Board has adopted a Code of Ethics applicable to all of our employees, including our executive officers and employees of our subsidiaries, and members of our Board. Any amendments to, or waivers under, the Code of Ethics that are required to be disclosed by SEC rules will be disclosed, within four business days of such amendment or waiver, on our website at www.qualcomm.com under the “Corporate Governance” section of our “Investor Relations” page, which appears under the “Company” tab. To date, there have not been any waivers by us under the Code of Ethics.
The Board has also adopted Corporate Governance Principles and Practices, which include information regarding the Board’s policies that guide its governance practices, including the roles, responsibilities and composition of the Board, director qualifications, committee matters and stock ownership guidelines, among others.
The Code of Ethics and the Corporate Governance Principles and Practices are available on our website at
http://www.qualcomm.com under the “Corporate Governance” section of our “Investor Relations” page.
BOARD LEADERSHIP STRUCTURE
 
 
 
 
 
Chairman and CEO Roles
The Board believes that it should maintain flexibility to establish and revise Qualcomm’s Board leadership structure from time to time. Our charter documents and policies do not prevent our Chief Executive Officer from also serving as our Chairman of the Board. Our Board evaluates its leadership structure and elects the Chairman and the Chief Executive Officer based on the criteria it deems to be appropriate and in the best interests of the Company and its stockholders, given the circumstances at the time of such election. While we have in the past had one person serve as Chairman of the Board and Chief Executive Officer, the positions are currently held by separate individuals.
Presiding (Lead Independent) Director Role
Our Board believes that the role of Presiding Director, which pursuant to our Corporate Governance Principles and Practices must be an independent director, provides an appropriate balance in Qualcomm’s leadership. The Presiding Director helps ensure a strong, independent and active Board. Under our Corporate Governance Principles and Practices, 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 director who would serve as Presiding Director for the next term, and (ii) the Presiding Director shall be elected by a vote of the independent members of the Board. An individual shall serve as the Presiding Director for a one-year period, commencing with the annual meeting of the Board. In general, the Board expects that a Presiding Director will serve two consecutive terms, but the independent members of the Board may extend a Presiding Director’s length of service (on a year by year basis) up to four consecutive terms. No Presiding Director shall serve more than four consecutive terms. Mr. Thomas Horton, a member of the Governance Committee, is currently the Presiding Director, having commenced his service in this role in March 2015. The Presiding Director has the following roles and responsibilities:
•
Presiding at all Board meetings at which the Chairman is not present, including executive sessions of the independent directors;
•
Acting as the principal liaison between the independent directors and the Chairman and the Chief Executive Officer;
•
Collaborating with the Chairman and the Chief Executive Officer in developing agendas for Board meetings;
•
Communicating with independent directors to ensure that matters of interest are included on agendas for Board meetings;
•
Communicating with independent directors and management to affirm that appropriate briefing materials are being provided to directors sufficiently in advance of Board meetings to allow for proper preparation and participation in meetings; and
•
Calling special meetings of the Board, with the concurrence of at least one additional director, as appropriate.

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Corporate Governance

BOARD MEETINGS, COMMITTEES AND ATTENDANCE
 
 
 
 
 
During fiscal 2016, the Board held nine meetings. Board agendas include regularly scheduled sessions for the independent directors to meet without management present, and the Board’s Presiding Director leads those sessions. The Board delegates various responsibilities and authority to different Board committees. We have three standing Board committees: the Audit, Compensation and Governance committees. Committees regularly report on their activities and actions to the full Board. Committee assignments are re-evaluated annually and approved by the Board at an annual meeting that follows the annual meeting of stockholders, typically in March of each year. Each committee acts according to a written charter approved by the Board. Copies of each charter can be found on our website at www.qualcomm.com under the “Corporate Governance” section of our “Investor Relations” page as follows:
Name of Committee
    
Website Link
 
 
Audit Committee
    
http://investor.qualcomm.com/documentdisplay.cfm?DocumentID=463
 
 
Compensation Committee
    
http://investor.qualcomm.com/documentdisplay.cfm?DocumentID=462
 
 
Governance Committee
    
http://investor.qualcomm.com/documentdisplay.cfm?DocumentID=461
 
 
The table below provides current committee membership information for each of the Board committees.
 
Committees
Name
Audit
Compensation
Governance
Barbara T. Alexander
 
Chair
 
Raymond V. Dittamore
Chair
 
 
Jeffrey W. Henderson
X
 
 
Thomas W. Horton *
 
 
X
Paul E. Jacobs
 
 
 
Ann M. Livermore
 
 
 
Harish Manwani
 
X
 
Mark D. McLaughlin
 
X
 
Steve Mollenkopf
 
 
 
Clark T. Randt, Jr.
 
 
Chair
Francisco Ros
 
 
X
Anthony J. Vinciquerra
X
 
 
Number of Committee Meetings Held in Fiscal 2016
10
6
21
*     Presiding Director
The Audit Committee. The Audit Committee meets at least quarterly with our management and independent public accountants to review the results of the annual integrated audit and quarterly reviews of our consolidated financial statements and to discuss our financial statements and earnings releases. The Audit Committee selects, engages, oversees and evaluates the qualifications, performance and independence of our independent public accountants, reviews the plans and results of internal audits and reviews evaluations by management and the independent public accountants of our internal control over financial reporting and the quality of our financial reporting, among other functions. All of the members of the Audit Committee are audit committee financial experts as defined by the SEC and independent directors within the meaning of Rule 5605 of the NASDAQ Stock Market LLC (NASDAQ Rule 5605) and Rule 10A-3(b)(1)(ii) of the Securities Exchange Act of 1934, as amended.

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Corporate Governance

The Compensation Committee. The Compensation Committee determines compensation levels for the Chief Executive Officer, the named executive officers (as listed in the Fiscal 2016 Summary Compensation Table), the Chief Accounting Officer, the other executive officers and directors, administers and approves stock offerings under our employee stock purchase and long-term incentive plans and performs such other functions regarding compensation as the Board may delegate. All of the members of the Compensation Committee are independent directors within the meaning of NASDAQ Rule 5605 and outside directors within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended.
The Governance Committee. The Governance Committee reviews, approves and oversees various corporate governance-related policies and procedures applicable to us, including emergency procedures (such as disaster recovery and security). The Governance Committee also reviews and evaluates the effectiveness of our executive development and succession planning processes and provides active leadership and oversight with respect to these processes. In addition, the Governance Committee evaluates and recommends nominees for membership on the Board and its committees. All of the members of the Governance Committee are independent directors within the meaning of NASDAQ Rule 5605.
During fiscal 2016, each director attended at least 75% of the aggregate of the meetings of the Board and the committees on which he or she served and that were held during the period for which he or she was a Board or committee member.
BOARD’S ROLE IN RISK OVERSIGHT
 
 
 
 
 
Qualcomm does not view risk in isolation, but considers risk as part of its regular evaluation of business strategy and business decisions. Assessing and managing risk is the responsibility of Qualcomm’s management, which establishes and maintains risk management processes, including action plans and controls, to balance risk mitigation and opportunities to create stockholder value. It is management’s responsibility to anticipate, identify and communicate risks to the Board and/or its committees. The Board oversees and reviews certain aspects of the Company’s risk management efforts, either directly or through its committees. Qualcomm approaches risk management by integrating its strategic planning, operational decision making and risk oversight and communicating risks and opportunities to the Board. The Board commits extensive time and effort every year to discussing and agreeing upon the Company’s strategic plan, and it reconsiders key elements of the strategic plan as significant events and opportunities arise during the year. As part of the review of the strategic plan, as well as in evaluating events and opportunities that occur during the year, the Board and management focus on the primary success factors and risks for the Company.
While the Board has primary responsibility for oversight of the Company’s risk management, the Board’s standing committees support the Board by regularly addressing various risks in their respective areas of oversight. Specifically, the Audit Committee assists the Board in fulfilling its oversight responsibilities with respect to the Company’s Enterprise Risk Management program, as well as risk management in the areas of financial reporting, internal controls and compliance with certain public reporting requirements. The Compensation Committee assists the Board in fulfilling its risk management oversight responsibilities with respect to risks arising from compensation policies and programs. The Governance Committee assists the Board in fulfilling its risk management oversight responsibilities with respect to risks related to corporate governance, succession planning and emergency procedures (including disaster recovery and security). Each of the committee Chairs reports to the full Board at regular meetings concerning the activities of the committee, the significant issues it has discussed and the actions taken by the committee.
We believe that our leadership structure supports the risk oversight function of the Board. With two members of management, our Executive Chairman and our Chief Executive Officer, serving on the Board, they are able to promote open communication between management and directors relating to risk. Additionally, each Board committee is comprised solely of independent directors, and all directors are actively involved in the risk oversight function.
DIRECTOR NOMINATIONS
 
 
 
 
 
Our Bylaws contain provisions that address the process (including required information and deadlines) by which a stockholder may nominate an individual to stand for election to the Board at our annual meeting of stockholders. In addition, the “proxy access” provisions of our Bylaws provide that, under certain circumstances, a stockholder or group of up to 20 stockholders seeking to include director candidates in our proxy statement must own at least 3% of our outstanding common stock continuously for at least the previous three years. The number of stockholder-nominated candidates appearing in the proxy statement for our annual meeting cannot exceed 20% of the number of directors to be elected. If 20% of the number of directors is not a whole number, the maximum number of stockholder-nominated candidates is rounded down to the next whole number. If the number of stockholder-nominated candidates exceeds 20%,

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Corporate Governance

one nominee from each nominating stockholder or group of stockholders, based on the order of priority provided by such nominating stockholder or group of stockholders, would be selected for inclusion in our proxy materials until the maximum number is reached. The order of priority among nominating stockholders or groups of stockholders would be determined based on the number (largest to smallest) of shares of our common stock held by such nominating stockholders or groups of stockholders. Each nominating stockholder or group of stockholders must provide the information required by our Bylaws, and each nominee must meet the qualifications required by our Bylaws. Requests to include stockholder-nominated candidates in our proxy materials for next year’s annual meeting must be received by the Corporate Secretary at our corporate offices at 5775 Morehouse Drive, N-520I, San Diego, California 92121-1714, no earlier than August 22, 2017 and no later than the close of business on September 21, 2017. Stockholders are advised to review our Bylaws, which contain additional requirements for submitting director candidates.
The Board has also adopted a formal policy concerning stockholder recommendations of Board candidates to the Governance Committee. This policy is set forth in our Corporate Governance Principles and Practices, which is available on our website at www.qualcomm.com under the “Corporate Governance” section of our “Investor Relations” page. Under this policy, the Governance Committee will review a reasonable number of candidates recommended by a single stockholder who has held over 1% of our common stock for over one year and who satisfies the notice, information and consent requirements set forth in our Bylaws. To recommend a nominee for election to the Board, a stockholder must submit his or her recommendation to the Corporate Secretary at our corporate offices at 5775 Morehouse Drive, N-520I, San Diego, California 92121-1714. A stockholder’s recommendation must be received by us within the time limits set forth above under “Stockholder Proposals.” A stockholder’s recommendation must be accompanied by the information with respect to the stockholder nominee as specified in the Bylaws, including among other things, the name, age, address and occupation of the recommended person, the proposing stockholder’s name and address, the ownership interests of the proposing stockholder and any beneficial owner on whose behalf the nomination is being made (including the number of shares beneficially owned, any hedging, derivative, short or other economic interests and any rights to vote any shares), and any material monetary or other relationships between the recommended person and the proposing stockholder and/or the beneficial owners on whose behalf the nomination is being made. The proposing stockholder must also provide evidence of owning the requisite number of shares of our common stock for over one year. Candidates so recommended will be reviewed using the same process and standards for reviewing Governance Committee recommended candidates.
In evaluating director nominees, the Governance Committee considers the following factors:
•
The appropriate size of the Board;
•
Our needs with respect to the particular talents, experience and diversity of our directors;
•
The knowledge, skills and experience of nominees, including experience in technology, business, finance, administration or public service, in light of prevailing business conditions and the knowledge, skills and experience already possessed by other members of the Board;
•
Familiarity with national and international business matters;
•
Experience in political affairs;
•
Experience with accounting rules and practices;
•
Appreciation of the relationship of our business to the changing needs of society;
•
The nominee’s other commitments, including the other boards on which the nominee serves; and
•
The desire to balance the considerable benefit of continuity with the periodic injection of the fresh perspective provided by new members.
The Governance Committee’s goal is to assemble a board of directors that brings to us a diversity of perspectives and skills derived from high quality business and professional experience. In doing so, the Governance Committee also considers candidates with appropriate non-business backgrounds.
There are no stated minimum criteria for director nominees, although the Governance Committee considers the foregoing and may also consider such other factors as it may deem are in the best interests of the Company and its stockholders. The Governance Committee does, however, believe it appropriate for at least one, and preferably several, members of the Board to meet the criteria for an “audit committee financial expert” as defined by the SEC, and for a majority of the members of the Board to meet the definition of “independent director” under NASDAQ Rule 5605. The Governance Committee also believes that it is in the best interests of stockholders that at least one key member of our current management participates as a member of the Board. The Governance Committee identifies nominees by first evaluating the current members of the

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Corporate Governance

Board willing to continue their service. Current members of the Board with skills and experience that are relevant to our business and who are willing to continue their service are considered for re-nomination, balancing the value of continuity of service by existing members of the Board with that of obtaining a new perspective. If any member of the Board does not wish to continue to serve or if the Governance Committee or the Board decides not to re-nominate a member for election, and if the Board determines not to reduce the Board size as a result, the Governance Committee identifies the desired skills and experience of a new nominee based on the criteria above. Current members of the Governance Committee and Board are polled for suggestions as to individuals meeting the criteria of the Governance Committee. Research may also be performed to identify qualified individuals. We have, in the past, engaged third parties to assist in identifying and evaluating potential nominees.
MAJORITY VOTING
 
 
 
 
 
Under our Bylaws, in an uncontested election, if any incumbent nominee for director receives a greater number of “withhold” votes (ignoring abstentions and broker non-votes) than votes cast “for” his or her election, the director shall promptly tender his or her resignation from the Board, subject to acceptance by the Board. In that event, the Governance Committee shall make a recommendation to the Board as to whether to accept or reject the tendered resignation or whether other actions should be taken. In making its recommendation, the Governance Committee will consider all factors it deems relevant, including, without limitation, the stated reasons why stockholders withheld votes from such director, the length of service and qualifications of such director, the director’s past contributions to us and the availability of other qualified candidates for director. The Governance Committee’s evaluation shall be forwarded to the Board to permit the Board to act on it no later than 90 days following the date of the annual meeting of stockholders. In reviewing the Governance Committee’s recommendation, the Board shall consider the factors evaluated by the Governance Committee and such additional information and factors as the Board believes to be relevant. If the Board determines that the director’s resignation is in the best interests of the Company and its stockholders, the Board shall promptly accept the resignation. We will publicly disclose the Board’s decision within four business days in a Current Report on Form 8-K, providing an explanation of the process by which the decision was reached and, if applicable, the reasons for not accepting the director’s resignation. The director in question will not participate in the Governance Committee’s or the Board’s considerations of the appropriateness of his or her continued service, except to respond to requests for information.
STOCK OWNERSHIP GUIDELINES
 
 
 
 
 
We adopted stock ownership guidelines for our directors and executive officers to help ensure that they each maintain an equity stake in the Company and, by doing so, appropriately link their interests with those of other stockholders. The guideline for executive officers is based on a multiple of the executive’s base salary, ranging from two to six times, with the size of the multiple based on the individual’s position with the Company. Only shares actually owned (as shares or as vested deferred stock units) count toward the requirement. Executives are required to achieve these stock ownership levels within five years of becoming an executive officer. Nonemployee directors are required to hold a number of shares of our common stock with a value equal to five times the annual retainer for Board service paid to U.S. residents. Nonemployee directors are required to achieve this ownership level within five years of joining the Board. In addition to the preceding ownership guidelines, all directors are expected to own shares of our common stock within one year of joining the Board.
COMMUNICATIONS WITH DIRECTORS
 
 
 
 
 
We have adopted a formal process for stockholder communications with the Board. This process is also set forth in our Corporate Governance Principles and Practices. Stockholders who wish to communicate to the Board should do so in writing to the following address:
[Name of Director(s) or Board of Directors]
Qualcomm Incorporated
Attn: General Counsel
5775 Morehouse Drive, N-520I
San Diego, California 92121-1714

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Corporate Governance

Our General Counsel logs all such communications (and the disposition of such communications as set forth below) and forwards those not deemed frivolous, threatening or otherwise inappropriate to the appropriate members of the Board and/or management.
ANNUAL MEETING ATTENDANCE
 
 
 
 
 
Our Corporate Governance Principles and Practices set forth a policy on director attendance at annual meetings. Directors are encouraged to attend absent unavoidable conflicts. All directors then in office attended our last annual meeting, except for Harish Manwani.
DIRECTOR INDEPENDENCE
 
 
 
 
 
The Board has determined that, except for Dr. Paul E. Jacobs and Mr. Steve Mollenkopf, all of the members of the Board are “independent directors” within the meaning of NASDAQ Rule 5605.

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PROPOSAL 1:  ELECTION OF DIRECTORS
ELECTION OF DIRECTORS
 
 
 
 
 
Our Restated Certificate of Incorporation (Certificate of Incorporation) and our Bylaws provide that directors are to be elected at our annual meeting of stockholders to hold office until the next annual meeting of stockholders and until their respective successors are elected and qualified. Vacancies on the Board resulting from death, resignation, disqualification, removal or other causes may be filled by either the affirmative vote of the holders of a majority of the then-outstanding shares of common stock or by the affirmative vote of a majority of the remaining directors then in office, even if less than a quorum of the Board is present. Newly created directorships resulting from any increase in the number of directors may, unless the Board determines otherwise, be filled only by the affirmative vote of the directors then in office, even if less than a quorum of the Board is present. Any director elected as a result of a vacancy shall hold office for a term expiring at the next annual meeting of stockholders and until such director’s successor has been elected and qualified.
Our Certificate of Incorporation provides that the number of directors shall be fixed exclusively by one or more resolutions adopted from time to time by the Board. Mr. Raymond Dittamore will conclude his service as a director at the Annual Meeting. The Board, upon recommendation of its Governance Committee, has decided to set the number of directors at 11 effective as of the time the stockholders vote on the election of directors at the Annual Meeting. Therefore, 11 directors will stand for election at the Annual Meeting.
In an uncontested election, our Bylaws provide that a director nominee will be elected only if he or she receives a majority of the votes cast with respect to his or her election (that is, the number of shares voted “for” a director nominee must exceed the number of “withhold” votes cast against that nominee). Abstentions and broker non-votes will each be counted as present for purposes of determining the presence of a quorum but will have no effect on the vote. In an uncontested election, if any nominee for director who is currently serving on the Board receives a greater number of “withhold” votes than votes “for” his or her election, the director shall promptly tender his or her resignation from the Board, subject to acceptance by the Board. The process that will be followed by the Board in that event is described above under the heading “Majority Voting.”
The nominees receiving a majority of votes cast with respect to his or her election will be elected directors of the Company. Shares of common stock represented by executed proxies will be voted, if authority to do so is not withheld, for the election of the 11 nominees named below. Each person nominated for election has agreed to serve, if elected, and the Board has no reason to believe that any nominee will be unable to serve.
NOMINEES FOR ELECTION
 
 
 
 
 
BARBARA T. ALEXANDER
Age: 68 Director Since: 2006
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Ms. Alexander has been an independent consultant since February 2004. She was a senior advisor for UBS from October 1999 to January 2004 and a managing director of Dillon Read & Co., Inc. from January 1992 to September 1999. Prior to joining Dillon Read, Ms. Alexander was a managing director in the corporate finance department of Salomon Brothers. Ms. Alexander has been a director of Allied World Assurance Company Holdings, Ltd. since August 2009 and Choice Hotels since February 2012. She previously served as a director of KB Home from October 2010 to April 2014, and has served as a director of a number of other public companies throughout her career. Ms. Alexander holds B.S. and M.S. degrees in theoretical mathematics from the University of Arkansas.
We believe Ms. Alexander’s qualifications to serve on our Board include her significant financial and accounting experience. In addition, she has extensive experience serving on several other public company boards, including in most instances service on the compensation committee and/or the audit committee of those other boards, which provides valuable insights to our Board. Her experience at Freddie Mac has added to her knowledge regarding risk management issues.

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Proposal 1: Election of Directors

JEFFREY W. HENDERSON
Age: 52 Director Since: 2016
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Mr. Henderson has been an Advisory Director to Berkshire Partners LLC, a private equity firm, since September 2015. He served as Chief Financial Officer of Cardinal Health Inc., a health care services company, from May 2005 to November 2014. Prior to joining Cardinal Health, Mr. Henderson held multiple positions at Eli Lilly and General Motors, including serving as President and General Manager of Eli Lilly Canada, Controller and Treasurer of Eli Lilly Inc., and in management positions with General Motors in Great Britain, Singapore, Canada and the U.S. Mr. Henderson has been a director of Halozyme Therapeutics, Inc. since August 2015 and a director of FibroGen, Inc. since August 2015. Mr. Henderson holds a B.S. degree in electrical engineering from Kettering University and an M.B.A. degree from Harvard Business School.
We believe Mr. Henderson’s qualifications to serve on our Board of Directors include his financial and operational management experience, including his significant experience in international operations, which is a source of valuable insights to our Board. His experience in senior operational and financial management positions at companies that experienced significant growth and transformation, including into additional business areas, also provides a useful resource to our senior management. He has been designated as an audit committee financial expert.
THOMAS W. HORTON
Age: 55 Director Since: 2008
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Mr. Horton has been a Senior Advisor in the Industrials and Business Services Group of Warburg Pincus LLC, a private equity firm focused on growth investing, since October 2015. Mr. Horton was Chairman of American Airlines Group Inc. (formed upon the merger of AMR Corporation (AMR) and US Airways Group, Inc.) from December 2013 to June 2014 and Chairman of American Airlines, Inc. (American) from November 2011 to June 2014. He was Chairman and Chief Executive Officer of AMR and Chief Executive Officer of American from November 2011 to December 2013, and President of AMR and American from July 2010 to December 2013. He served as Executive Vice President and Chief Financial Officer of AMR and American from March 2006 to July 2010. He served as Vice Chairman and Chief Financial Officer of AT&T Corporation (AT&T) from January 2002 to February 2006. Prior to joining AT&T, Mr. Horton was Senior Vice President and Chief Financial Officer of AMR from January 2000 to January 2002 and served in numerous management positions with AMR commencing in 1985. Mr. Horton has been a director of Wal-Mart Stores, Inc. since November 2014. Mr. Horton holds a B.B.A. degree in accounting from Baylor University and an M.B.A. degree from Southern Methodist University.
We believe Mr. Horton’s qualifications to serve on our Board include his management, financial and accounting experience, including his former service as Chairman and CEO of American, as Vice Chairman and Chief Financial Officer of AT&T and as Executive Vice President and Chief Financial Officer of American. In particular, Mr. Horton’s roles in operational and financial management at American and AT&T bring valuable insights to our Board, as well as providing a useful resource to our senior management.

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Proposal 1: Election of Directors

PAUL E. JACOBS
Age: 54 Director Since: 2005
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Dr. Jacobs is our Executive Chairman and Chairman of the Board of Directors. He has served as Chairman of the Board since March 2009 and as Executive Chairman since March 2014. He served as Chief Executive Officer from July 2005 to March 2014 and as Group President of Qualcomm Wireless & Internet from July 2001 to July 2005. In addition, he served as an executive vice president from February 2000 to June 2005. Dr. Jacobs was a director of A123 Systems, Inc. from November 2002 to July 2012. Dr. Jacobs holds a B.S. degree in electrical engineering and computer science, an M.S. degree in electrical engineering and a Ph.D. degree in electrical engineering and computer science from the University of California, Berkeley.
We believe Dr. Jacobs’s qualifications to serve on our Board include his extensive business, operational and management experience in the wireless telecommunications industry, including his current position as our Executive Chairman and his prior service as our Chief Executive Officer. His extensive knowledge of our business, products, strategic relationships and opportunities, as well as the rapidly evolving technologies and competitive environment in our industry, bring valuable insights and knowledge to our Board.
ANN M. LIVERMORE
Age: 58 Director Since: 2016
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Ms. Livermore served as Executive Vice President of the Enterprise Business at Hewlett-Packard Company (HP) from May 2004 to June 2011 and as Executive Vice President of HP Services from 2002 to May 2004. She joined HP in 1982 and served in a number of management and leadership positions across the company. Ms. Livermore has been a director of United Parcel Services, Inc. since November 1997 and Hewlett Packard Enterprise since November 2015. Ms. Livermore was a director of HP from June 2011 to November 2015. Ms. Livermore holds a B.A. degree in economics from the University of North Carolina, Chapel Hill and an M.B.A. degree from Stanford University.

We believe Ms. Livermore’s qualifications to serve on our Board include her extensive operational experience in senior positions, including leading complex global business organizations with large workforces. Her significant experience in the areas of technology, marketing, sales, research and development and business management provide valuable insights to our Board and also provide useful resources to our senior management. Our Board and senior management also benefit from Ms. Livermore’s experience from serving on other public company boards.

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Proposal 1: Election of Directors

HARISH MANWANI
Age: 63 Director Since: 2014
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Mr. Manwani has been a Global Executive Advisor to Blackstone Private Equity group since February 2015. Mr. Manwani was the Chief Operating Officer for Unilever PLC, a leading global consumer products company, from September 2011 to December 2014. He served as Unilever’s President, Asia, Africa, Middle East and Turkey, which was later extended to include Central and Eastern Europe, from April 2005 to August 2011. He served as Unilever’s President, Home & Personal Care, North America from March 2004 to March 2005. He served as Unilever’s President, Home & Personal Care, Latin America and as the Chairman of Unilever’s Latin America Advisory Council from April 2001 to February 2004. He served as Unilever’s Senior Vice President, Global Hair and Oral Care from June 2000 to March 2001. He joined Hindustan Unilever Limited as a management trainee in 1976 and subsequently held various general management positions of increasing responsibilities within Unilever globally. Mr. Manwani has been the Non-Executive Chairman of Hindustan Unilever Limited since July 2005 and a director of Whirlpool Corporation since August 2011, Pearson plc since October 2013 and Nielsen Holdings plc since January 2015. Mr. Manwani holds a B.Sc. honors degree in statistics and an M.M.S. degree in management studies, both from Mumbai University in India. He has also attended the Advanced Management Program at Harvard Business School.
We believe that Mr. Manwani’s qualifications to serve on our Board include his substantial management experience involving international operations, particularly in Asia. His executive management experience, particularly with respect to strategic planning and leadership of complex organizations, provides a valuable resource for our senior management. His experience on the boards of several other companies also brings valuable insights to our Board.
MARK D. McLAUGHLIN
Age: 51 Director Since: 2015
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Mr. McLaughlin has been the Chairman of the Board and Chief Executive Officer of Palo Alto Networks, Inc., a network security company, since August 2016. He served as Chairman of the Board, President and Chief Executive Officer from April 2012 to August 2016. He joined Palo Alto Networks as President and Chief Executive Officer, and as a director, in August 2011 and became Chairman of the Board in April 2012. Mr. McLaughlin served as President and Chief Executive Officer and as a director of VeriSign, Inc., a provider of Internet infrastructure services, from August 2009 to August 2011 and as President and Chief Operating Officer from January 2009 to August 2009. Mr. McLaughlin served in various other management and leadership roles at VeriSign from February 2000 through November 2007 and provided consulting services to VeriSign from November 2008 to January 2009. Prior to joining VeriSign, Mr. McLaughlin was Vice President, Sales and Business Development at Signio Inc., an internet payments company acquired by VeriSign in February 2000. President Barack Obama appointed Mr. McLaughlin to serve on the National Security Telecommunications Advisory Committee (NSTAC) in January 2011 and to the position of Chairman of the NSTAC in November 2014. Mr. McLaughlin served as a director of Opower, Inc. from October 2013 to June 2016. Mr. McLaughlin holds a B.S. degree from the U.S. Military Academy at West Point and a J.D. from Seattle University School of Law.
We believe Mr. McLaughlin’s qualifications to serve on our Board include his operational and management experience at several technology companies. Mr. McLaughlin’s service on the NSTAC, as well as his experience as Chief Executive Officer and a member of the board of directors of a network security company, provide him with significant knowledge regarding the operations and security of telecommunications systems and cybersecurity matters, which bring valuable insights to our Board.

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Proposal 1: Election of Directors

STEVE MOLLENKOPF
Age: 48 Director Since: 2013
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Mr. Mollenkopf has served as our Chief Executive Officer since March 2014 and as a director since December 2013. He served as Chief Executive Officer-elect and President from December 2013 to March 2014 and as President and Chief Operating Officer from November 2011 to December 2013. In addition, he served as Executive Vice President and Group President from September 2010 to November 2011, as Executive Vice President and President of QCT from August 2008 to September 2010, as Executive Vice President, QCT Product Management from May 2008 to August 2008, as Senior Vice President, Engineering and Product Management from July 2006 to May 2008 and as Vice President, Engineering from April 2002 to July 2006. Mr. Mollenkopf joined Qualcomm in 1994 as an engineer and throughout his tenure at Qualcomm has held several other technical and leadership roles. Mr. Mollenkopf has been a director of General Electric Company since November 2016. Mr. Mollenkopf holds a B.S. degree in electrical engineering from Virginia Tech and an M.S. degree in electrical engineering from the University of Michigan.
We believe Mr. Mollenkopf’s qualifications to serve on our Board include his extensive business, operational and management experience in the wireless telecommunications industry, including his current position as our Chief Executive Officer. His extensive knowledge of our business, products, strategic relationships and opportunities, as well as the rapidly evolving technologies and competitive environment in our industry, bring valuable insights and knowledge to our Board.
CLARK T. “SANDY” RANDT, JR.
Age: 71 Director Since: 2013
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Ambassador Randt has been President of Randt & Co. LLC, a company that advises firms with interests in China, since February 2009. He is a former U.S. Ambassador to the People’s Republic of China, where he served from July 2001 to January 2009. He was a partner resident in the Hong Kong office of Shearman & Sterling, a major international law firm where he headed the firm’s China practice, from January 1994 to June 2001. Ambassador Randt served as First Secretary and Commercial Attaché at the U.S. Embassy in Beijing from August 1982 to October 1984. He was the China representative of the National Council for United States-China Trade in 1974, and he served in the U.S. Air Force Security Service from August 1968 to March 1972. Ambassador Randt has been a director of Valmont Industries, Inc. since February 2009, a director of the United Parcel Service, Inc. since August 2010 and a director of Wynn Resorts Ltd. since October 2015. He is fluent in Mandarin Chinese. Ambassador Randt holds a B.A. degree in English literature from Yale University and a J.D. degree from the University of Michigan. He also attended Harvard Law School where he was awarded the East Asia Legal Studies Traveling Fellowship to China.
We believe Ambassador Randt’s qualifications to serve on our Board include his deep understanding of Asia and experience in facilitating business in China and more generally throughout Asia, which is one of the most important regions to our business. He brings to our Board substantial experience in diplomacy, international trade and cross-border commercial transactions, including service as the U.S. Ambassador to the People’s Republic of China. His international experience and knowledge of Asian business operations provide valuable insights to our Board.

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Proposal 1: Election of Directors

FRANCISCO ROS
Age: 66 Director Since: 2010
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Dr. Ros is President of First International Partners, S.L., a business consulting firm he founded in 2002. He was Secretary of State (vice minister) of the Government of Spain from May 2004 to July 2010. He served as a senior director of business development of Qualcomm from July 2003 to April 2004. He was Chairman and CEO of Alua Broadband Optical Access, a company he co-founded, from January 2000 to June 2002. Dr. Ros served as President and CEO of Unisource (a joint venture among KPN, Telia, Swisscom and Telefónica) from May 1996 to October 1998. Dr. Ros headed several business areas within the Telefónica Group from April 1983 to November 1996 and became Managing Director of the holding company and a member of its Executive Management Board. Dr. Ros was a director of Elephant Talk Communications Corp. from September 2014 to February 2016. Dr. Ros holds an engineering and a Ph.D. degree in telecommunications from the Universidad Politecnica de Madrid, an M.S. degree in electrical engineering and a Ph.D. degree in electrical engineering and computer science from the Massachusetts Institute of Technology and an advanced management degree from the Instituto de Estudios Superiores de la Empresa Business School in Madrid.
We believe Dr. Ros’s qualifications to serve on our Board include his extensive executive management and board experience in telecommunications companies and operators in Europe and Latin America, his significant experience related to the overall telecommunications and IT regulatory environment in Europe (including his service in the Government of Spain at a time when Spain held the Presidency of the European Union), as well as his technical and business background and education. In addition, Dr. Ros brings a non-U.S. perspective to issues facing us, enhancing the understanding of our Board.
ANTHONY J. VINCIQUERRA
Age: 62 Director Since: 2015
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Mr. Vinciquerra has been a Senior Advisor to Texas Pacific Group (TPG) in the Technology, Media and Telecom sectors, where he advises TPG on acquisitions and operations, since September 2011. Mr. Vinciquerra was Chairman of Fox Networks Group, the largest operating unit of News Corporation, from September 2008 to February 2011 and President and Chief Executive Officer from June 2002 to February 2011. Earlier in his career, he held various management positions in the broadcasting and media industry. Mr. Vinciquerra has been a director of Pandora Media, Inc. since March 2016. He previously served as a director of Motorola Mobility Holdings, Inc. from January 2011 to May 2012 and a director of DirecTV from September 2013 to July 2015. Mr. Vinciquerra holds a B.A. degree in marketing from the State University of New York.
We believe Mr. Vinciquerra’s qualifications to serve on our Board include his management experience, including significant experience in operations, which is a source of important insights to our Board, as well as providing a useful resource to our senior management. His prior media industry experience is especially valuable with the convergence of the Internet, wireless, media and computing industries. He has been designated as an audit committee financial expert.
REQUIRED VOTE AND BOARD RECOMMENDATION
 
 
 
 
 
The affirmative vote of a majority of the votes cast at the Annual Meeting at which a quorum is present, either in person or by proxy, is required to elect each of the 11 nominees for director, meaning that the number of shares cast “for” a nominee’s election exceeds the number of “withhold” votes cast against that nominee. If you hold your shares in your own name and abstain from voting on this matter, your abstention will have no effect on the vote. If you hold your shares through a broker and you do not instruct the broker on how to vote for each of the 11 nominees, your broker will not have the authority to vote your shares. Abstentions and broker non-votes will each be counted as present for purposes of determining the presence of a quorum but will not have any effect on the outcome of the vote.
THE BOARD RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH OF THE ABOVE NOMINEES.

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PROPOSAL 2:  RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee has selected PricewaterhouseCoopers LLP as our independent public accountants for the fiscal year ending September 24, 2017, and the Board has directed that management submit this selection for ratification by the stockholders at the Annual Meeting. PricewaterhouseCoopers LLP has audited our consolidated financial statements since we commenced operations in 1985.
The Audit Committee has evaluated PricewaterhouseCoopers LLP’s qualifications, performance and independence, including that of the lead audit partner. This evaluation was conducted with input from senior management.
Stockholder ratification of the selection of PricewaterhouseCoopers LLP as our independent public accountants is not required by our Bylaws or otherwise. However, the Board is submitting the selection of PricewaterhouseCoopers LLP to stockholders for ratification as a matter of good corporate governance. If stockholders fail to ratify the selection, the Audit Committee will reconsider whether or not to retain PricewaterhouseCoopers LLP. Even if the selection is ratified, the Audit Committee at its discretion may direct the appointment of different independent public accountants at any time during the year if it determines that such a change would be in the best interests of the Company and its stockholders.
FEES FOR PROFESSIONAL SERVICES
 
 
 
 
 
The following table presents fees for professional services rendered by PricewaterhouseCoopers LLP during our fiscal years ended September 25, 2016 and September 27, 2015 for the audits of our annual consolidated financial statements and fees for other services. All of the services described in the following table were approved in conformity with the Audit Committee’s pre-approval process described below.
 
Fiscal
2016
Fiscal
2015
Audit fees (1)
$
8,516,000

$
6,725,000

Audit-related fees (2)
2,928,000

4,597,700

Tax fees (3)
543,000

115,200

All other fees (4)
253,000

82,400

Total
$
12,240,000

$
11,520,300

(1)
Audit fees consist of fees for professional services rendered for the audit of our annual consolidated financial statements and the effectiveness of our internal control over financial reporting, the reviews of our interim condensed consolidated financial statements included in quarterly reports and audits of certain subsidiaries for statutory and regulatory purposes.
(2)
Audit-related fees consist of fees for assurance and related services that are reasonably related to the performance of the audit or reviews of our consolidated financial statements and are not reported under “audit fees.” This category includes fees principally related to field verification of royalties from certain licensees.
(3)
Tax fees consist of fees for permissible advisory services regarding general tax consulting services, including consulting on tax matters related to merger and acquisition activity.
(4)
All other fees consist of fees for permissible advisory services provided in connection with market condition studies, services related to conflict minerals reporting requirements and technical publications purchased from the independent public accountants.
POLICY ON AUDIT COMMITTEE PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES OF INDEPENDENT PUBLIC ACCOUNTANTS
 
 
 
 
 
The Audit Committee’s policy is to pre-approve all audit and non-audit services provided by our independent public accountants. These services may include audit services, audit-related services, tax services and other services. Pre-approval is generally provided for up to one year, and any pre-approval is detailed as to the particular service or category of services and an estimated fee. The Audit Committee has delegated certain pre-approval authority to its Chair and certain members of management when expedition of approval is necessary, subject to review by the Audit Committee at its next meeting.

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Proposal 2: Ratification of Selection of Independent Public Accountants

Our independent public accountants and management periodically report to the full Audit Committee regarding the extent of services provided by the independent public accountants and the fees for the services performed to date.
REPRESENTATION FROM PRICEWATERHOUSECOOPERS LLP AT THE ANNUAL MEETING
 
 
 
 
 
Representatives of PricewaterhouseCoopers LLP are expected to be present at the Annual Meeting, will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions.
REQUIRED VOTE AND BOARD RECOMMENDATION
 
 
 
 
 
The affirmative vote of a majority of the votes cast at the Annual Meeting at which a quorum is present, either in person or by proxy, is required to approve this proposal. If you hold your shares in your own name and abstain from voting on this matter, your abstention will have no effect on the vote. If you hold your shares through a broker and you do not instruct the broker on how to vote on this proposal, your broker will have the authority, but is not required, to vote your shares. Abstentions and broker non-votes will each be counted as present for purposes of determining the presence of a quorum but will not have any effect on the outcome of the proposal.
THE BOARD RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENT PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR ENDING SEPTEMBER 24, 2017.

20qualcommlogoa04.jpg2017 Proxy Statement

PROPOSAL 3:  ADVISORY VOTE FOR APPROVAL OF OUR EXECUTIVE COMPENSATION
This stockholder advisory vote, commonly known as “Say-on-Pay,” is required pursuant to Section 14A of the Securities Exchange Act of 1934, as amended, and gives our stockholders the opportunity to approve or not approve, on a non-binding advisory basis, the compensation paid to our named executive officers (NEOs). The Board recommends a vote “FOR” the following resolution:
“Resolved, that the stockholders of QUALCOMM Incorporated hereby approve, on a non-binding advisory basis, the compensation paid to the Company’s named executive officers, as disclosed in this proxy statement, including the Compensation Discussion and Analysis, compensation tables and narrative disclosures.”
COMPENSATION PROGRAM BEST PRACTICES
 
 
 
 
 
We continued our many ongoing executive compensation practices that promote consistent leadership, decision-making and actions without taking inappropriate or unnecessary risks. These practices are discussed in detail in the Compensation Discussion and Analysis (CD&A) section and include: 
•
A majority of our long-term incentive equity awards are performance-based.
•
A significant portion of our executive officers’ compensation varies with Company financial and stock performance.
•
We have a balanced approach to incentive programs, including a mix of short- and long-term incentives and performance measures.
•
We have limits on incentive amounts that may be earned in the event we significantly exceed our annual financial performance objectives or experience exceptional performance relative to peer companies. We also have limits on incentive amounts that may be earned in the event we do not meet or exceed our annual financial performance objectives. Further, if certain minimum annual financial performance objectives are not met, no incentive amounts will be earned.
•
We have an enterprise risk management process that includes compensation, talent management and succession planning.
•
We have stock ownership guidelines.
•
We do not provide tax gross-ups for benefits unless they are provided under a policy generally applicable to all eligible employees, such as relocation.
•
We have a cash incentive compensation clawback policy in the event of an accounting restatement.
•
Our insider trading policy includes a prohibition on hedging and pledging of our common stock covering all executive officers and directors.
•
Our NEOs do not have severance agreements or employment contracts, and our equity acceleration in the event of a change in control is “double-trigger.”
•
Our compensation decisions are made with both prevalent practices and comparative performance information as background, using objectively selected smaller and larger peers where the Company is reasonably positioned in the middle of the range.
•
The Compensation Committee engages an independent compensation consulting firm to advise it on compensation matters, such as recommendations for potential peer companies, analyses of competitive practices for executive officers and directors and aggregate equity compensation spending.
REQUIRED VOTE
 
 
 
 
 
The affirmative vote of a majority of the votes cast at the Annual Meeting at which a quorum is present, either in person or by proxy, is required to approve this proposal. If you hold your shares in your own name and abstain from voting on this matter, your abstention will have no effect on the vote. If you hold your shares through a broker and you do not instruct the broker on how to vote on this proposal, your broker will not have the authority to vote your shares. Abstentions and broker

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Proposal 3: Advisory Vote for Approval of Our Executive Compensation

non-votes will each be counted as present for purposes of determining the presence of a quorum but will not have any effect on the outcome of the proposal.
EFFECT OF THIS RESOLUTION
 
 
 
 
 
Because your vote is advisory, it will not be binding upon the Company, the Board or the Compensation Committee. However, we value the opinions of our stockholders, and the Compensation Committee will take into account the outcome of this vote when considering future compensation decisions.
BOARD RECOMMENDATION
 
 
 
 
 
The Board believes that the compensation of our NEOs, as described in the CD&A, compensation tables and narrative disclosures, is appropriate for the reasons discussed herein.
THE BOARD RECOMMENDS AN ADVISORY VOTE “FOR” APPROVAL OF OUR EXECUTIVE COMPENSATION.

22qualcommlogoa04.jpg2017 Proxy Statement

PROPOSAL 4: STOCKHOLDER PROPOSAL TO AMEND THE PROXY ACCESS PROVISION OF OUR AMENDED AND RESTATED BYLAWS
The following stockholder proposal will be voted on at the Annual Meeting if properly presented by or on behalf of the stockholder proponent.
The Company has been advised that Mr. James McRitchie, 9295 Yorkship Court, Elk Grove, California 95758, has indicated that he is a beneficial owner of at least $2,000 in market value of the Company’s common stock and intends to submit the following proposal at the Annual Meeting.
The text of the stockholder proposal and supporting statement appear exactly as received by the Company unless otherwise noted. All statements contained in the stockholder proposal and supporting statement are the sole responsibility of the stockholder. The stockholder proposal may contain assertions about the Company or other matters that we believe are incorrect or misleading, but we have not attempted to refute all of those assertions.RESOLVED: Shareholders of QUALCOMM, Inc. (the “Company”) ask the board of directors (the “Board”) to amend its “Proxy Access” bylaw, and any other associated documents, to include essential elements for substantial implementation to better facilitate meaningful proxy access by more shareholders as follows:
1.
The number of “Stockholder Nominees” eligible to appear in proxy materials shall be 25% of the directors then serving or 2, whichever is greater. Current bylaws restrict Stockholder Nominees to 20% of directors or 2, whichever is greater. Under the current 11-member board, this change would have no immediate impact but could ensure shareholders a continued meaningful proportion of representation if the number of directors is changed.
2.
No limitation shall be placed on the number of stockholders that can aggregate their shares to achieve the 3% “Required Ownership Percentage” for an “Eligible Shareholder.” Under current provisions, even if the 20 largest public pension funds were able to aggregate their shares, they would not meet the 3% criteria at most of companies examined by the Council of Institutional Investors. Allowing an unlimited number of shareholders to aggregate shares will facilitate greater participation by individuals and institutional investors in meeting the “Required Ownership Percentage” of 3%.
Supporting Statement:
The SEC’s universal proxy access Rule 14a-11 (https://www.sec.gov/rules/final/2010/33-9136.pdf) was vacated after a court decision regarding the SEC’s cost-benefit analysis. Therefore, proxy access rights must be established on a company-by-company basis. Subsequently, Proxy Access in the United States: Revisiting the Proposed SEC Rule (http://www.cfapubs.org/doi/pdf/10.2469/ccb.v2014.n9.1) a cost-benefit analysis by CFA Institute, found proxy access would “benefit both the markets and corporate boardrooms, with little cost or disruption,” raising US market capitalization by up to $140.3 billion. Public Versus Private Provision of Governance: The Case of Proxy Access (http://ssrn.com/abstract=2635695) found a 0.5 percent average increase in shareholder value for proxy access targeted firms.
Proxy Access: Best Practices (http://www.cii.org/files/publications/misc/08_05_15_Best%20Practices%20-%20Proxy%20Access.pdf) by the Council of Institutional Investors, “highlights the most troublesome provisions” in recently implemented proxy access bylaws.
Although the Company’s board adopted a proxy access bylaw in 2016, it contains troublesome provisions, as addressed above, that significantly impair the ability of shareholders to participate as Eligible Stockholders and the ability of Stockholder Nominees to effectively serve if elected. Adoption of the requested amendments would largely remedy these issues and would better ensure meaningful proxy assess [sic] is eligible to more shareholders.
Increase Shareholder Value
Vote for Shareholder Proxy Access Amendment - Proposal 4

THE COMPANY’S STATEMENT IN OPPOSITION TO PROPOSAL 4
 
 
 
 
 
The Board has carefully considered this stockholder proposal and believes that it is unnecessary and potentially detrimental to the Company and its stockholders. Accordingly, the Board recommends a vote AGAINST Proposal 4.

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Proposal 4: Stockholder Proposal

We adopted in 2015, and enhanced in 2016, a carefully considered proxy access framework that reflects the input of extensive discussions with our stockholders, that we believe is consistent with best practices and the vast majority of proxy access bylaws adopted by U.S. public companies, and that strikes the appropriate balance between promoting meaningful stockholder nomination rights and protecting the best interests of all of our stockholders.
Our proxy access bylaw permits a group of up to 20 stockholders, owning at least 3% of our common stock continuously for at least 3 years, to include in our annual meeting proxy materials director nominees constituting up to 20% of the Board (but no fewer than two nominees). Our proxy access bylaw reflects input from many of our significant stockholders, as well as the published positions of other significant stockholders. In addition, we believe it is consistent with best practices and the vast majority of proxy access bylaws adopted by U.S. public companies. Finally, we believe that our proxy access bylaw appropriately balances the interests of providing meaningful proxy access rights to our stockholders while mitigating the possibility of proxy access being used by stockholders to pursue objectives that are not broadly supported by other stockholders.
Following adoption of our proxy access bylaw in late 2015, we continued to monitor the development of proxy access, and in 2016, we conducted significant stockholder outreach regarding proxy access. We received valuable feedback from our stockholders on this topic, including regarding what they believed to be appropriate proxy access parameters.
In July 2016, reflecting this input from our stockholders as well as ongoing developments in how proxy access had been implemented at other companies, the Board refined our proxy access bylaw to provide even broader rights to our stockholders. The key revisions:
•
Changed the maximum number of stockholder nominees from 20% of the Board to the greater of two or 20% of the Board;
•
Removed the clause which provided that a stockholder nominee whom the Board decides to nominate as one of its own nominees counts against the maximum number of stockholder nominees;
•
Removed the requirement that each nominating stockholder provide a representation that it intends to hold its shares for at least one year following the annual meeting;
•
Removed the clause which provided that a stockholder nominee who does not receive at least 25% support will be prohibited from being a stockholder nominee for the next two annual meetings; and
•
Removed the clause which provided that each nominating stockholder who has one of its stockholder nominees elected to the Board may not nominate other candidates for the next two annual meetings.
The Board believes that the revised provisions strike the appropriate balance between providing a manageable proxy access process while mitigating the possibility of proxy access being used by stockholders pursuing objectives that are not broadly supported by our other stockholders. These revised terms were in several cases more favorable than prevailing practices among other large U.S. companies that had adopted proxy access, for example, by removing restrictions on proxy access rights being exercised by stockholders which had included nominees in prior proxy statements.
Accordingly, we do not believe that the proposed changes to our existing proxy access bylaw are in the best interests of our stockholders, and the Board recommends a vote AGAINST the stockholder proposal.
Initial Adoption of Proxy Access
In December 2015, the Board carefully considered viewpoints of investors, governance experts and other advisors on proxy access rights and the developing proxy access trends among other U.S. public companies and adopted a robust proxy access bylaw. The Board noted the beliefs of many investors that proxy access rights would increase accountability of directors to stockholders and would give stockholders a more meaningful voice in electing directors, while at the same time recognizing the views of other investors that the implementation of any proxy access provision could undermine the role of the Company’s independent Governance Committee and could lead to, among other things, unnecessary expense and distraction, as well as an inexperienced, fragmented and less effective Board with directors who may pursue special interests not shared by all or most of our stockholders. Based on the information available to the Board at that time and the Board’s own thoughtful deliberations on the topic, the Board concluded that the best course of action for the Company and our stockholders was to adopt a proxy access bylaw with parameters comparable to those adopted by other large U.S. public companies seeking to implement meaningful proxy access rights for their stockholders, while also tailored to the Company’s particular circumstances. As reflected in the proxy access bylaw adopted in 2015, the Board determined, and continues to believe, that a 3% ownership threshold for at least a 3-year holding period and a nominating group of no more than 20 stockholders with the ability to nominate candidates for up to 20% of the Board is most appropriate for the Company.

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Proposal 4: Stockholder Proposal

We have an effective and manageable proxy access framework, and we believe that the requested changes are unnecessary and potentially disruptive.
The Board believes that this stockholder proposal, which contemplates proxy access for up to 25% of the Board and an unlimited stockholder group, does not appropriately balance the potential disruption that could be created by regular proxy contests and the corresponding turnover of a number of Board seats, together with the challenges of on-boarding and integrating these new directors, against the benefits stockholders would gain under proxy access. Based on the composition of our stockholder base and feedback from our stockholders, the Board concluded that limiting the size of the nominating group to no more than 20 stockholders provides stockholders with a meaningful and appropriate opportunity to include nominees in our proxy statement. The Board also considered the complexities of receiving nominations from a large number of stockholders (each potentially holding small numbers of shares) and the time and other costs that would be associated with managing such an unwieldy process. The Board concluded that making available 20% of the Board seats (with a minimum of two) for proxy access with a reasonable limitation on the number of stockholders that could constitute a group provides an appropriately balanced approach.
•
The stockholder proposal would allow stockholders (holding 3% of our common stock) to nominate up to 25% of the Board each year, which could result in unnecessary disruption to the Board and reduce the Board’s effectiveness.
Consistent with the vast majority of other U.S. public companies who have adopted proxy access, our proxy access bylaw permits eligible stockholders to nominate the greater of two nominees or 20% of the Board. This fully accomplishes the main objective of proxy access -- providing meaningful representation on a board for qualified individuals endorsed by a majority of stockholders. We believe that raising the potential level of representation to 25% of the Board could have unintended effects that could be destructive of stockholder value, including promoting the use of proxy access to lay the groundwork for effecting a change in control, encouraging the pursuit of special interests at the expense of a long-term strategic view or otherwise disrupting the effective functioning of the Board (including the staffing of committees). Further, our Governance Committee has an important role in considering the effectiveness of the Board and in identifying nominees who have the appropriate mix of experiences, areas of expertise and educational backgrounds in order to establish and maintain a Board that is strong in its collective knowledge, experiences and skills, and that can fulfill its responsibilities, facilitate our long-term success and represent the interests of our stockholders broadly. With respect to nominations through proxy access, however, the Governance Committee is unable to consider those factors. Accordingly, the Board believes that limiting candidates nominated through our existing proxy access bylaw to 20% of the Board will help to ensure that director turnover does not disrupt the Board’s effectiveness.
•
The stockholder proposal places no limit on the number of stockholders who can assemble as a group to establish the ownership threshold required to make a proxy access nomination, which may result in excessive administrative burden and expense for the Company and its stockholders.
Consistent with the vast majority of other U.S. public companies who have adopted proxy access, our proxy access bylaw permits groups of up to 20 stockholders to aggregate their shares to reach the required 3% ownership threshold (with a group of investment funds under common management and investment control counting as a single stockholder). We do not believe that allowing an unlimited number of stockholders to aggregate their shares is workable for the nominating stockholder group, given the broad solicitation that would be required and the practical difficulties of coordinating a larger number of stockholders. We believe that a reasonable limitation should be established to reduce the Company’s administrative burden and costs and help reduce the risk of abuse of proxy access rights by stockholders with special interests, including interests unrelated to long-term stockholder value. In the absence of a reasonable limitation on the number of stockholders in a group, the Company could be required to make burdensome and time-consuming inquiries into the nature and duration of the share ownership of a large number of stockholders participating in a proxy access nomination in order to verify their required share ownership.
With our current ownership structure, any group of 20 of our largest 100 stockholders (which includes several public pension funds) would own at least 3% of our shares. In many cases, the 3% threshold could be achieved with far fewer than 20 stockholders.
Furthermore, a 20-stockholder limit is widely embraced by companies adopting proxy access and widely endorsed among institutional stockholders’ voting policies. As a result, we do not believe that it would be appropriate, and in fact would be detrimental to the Company and our stockholders, to remove the limit on the number of stockholders that could constitute a proxy access group.

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Proposal 4: Stockholder Proposal

We have a strong corporate governance structure and record of accountability.
Our current corporate governance structure reflects our significant and ongoing commitment to strong and effective governance practices and our desire to be responsive and accountable to stockholders. We are committed to providing our stockholders with a meaningful voice in the nomination and election of directors and the ability for our stockholders to engage with the Board to promote their views. We regularly assess and refine our corporate governance policies and procedures to take into account evolving best practices and to address feedback provided by our stockholders.
In addition to adopting (and subsequently revising) our proxy access bylaw, over the last several years we have implemented numerous other corporate governance enhancements, including:
•
All of our directors are elected annually.
•
All of our directors must be elected by a majority vote in an uncontested election, and any director who fails to receive the required number of votes must tender his or her resignation for consideration by the Board.
•
The Board consists entirely of independent directors, other than the Executive Chairman and the CEO.
•
All standing committees of the Board are comprised solely of independent directors.
•
The roles of the Chairman of the Board and the Chief Executive Officer have been separated.
•
We have an independent Presiding Director (elected by and from the independent members of the Board) with defined and significant responsibilities, including: acting as the principal liaison between the independent directors and the Executive Chairman and the CEO; collaborating with the Executive Chairman and the CEO in developing agendas for Board meetings; and presiding during executive sessions of the independent directors.
•
Our stockholders are able to:
◦
recommend director candidates to our Governance Committee, which considers such recommendations in the same manner as recommendations received from other sources (as described above in the “Corporate Governance” section under the heading “Director Nominations”);
◦
directly nominate director candidates and solicit proxies for the election of those candidates in accordance with our bylaws and the federal securities laws;
◦
submit proposals for inclusion in the Company’s proxy statement for consideration at an annual meeting of stockholders, subject to the rules and regulations of the SEC;
◦
communicate directly with members of the Board, the Executive Chairman, the Presiding Director, any Board committee or our independent directors as a group (as described further in the “Corporate Governance” section under “Communications with Directors”); and
◦
express their views on executive compensation through annual “say-on-pay” votes.
The Board also has shown an ongoing commitment to Board refreshment and to having highly qualified, independent voices in the boardroom. In the last two years, we reduced the size of the Board (from a high of 16 directors to 11 directors nominated for election at the Annual Meeting) as well as the average tenure of the Board. Through our robust director nomination and evaluation process, six of the Company’s nine independent directors nominated for election at the Annual Meeting have been added to the Board since 2013. Importantly, several of these new directors were based on suggestions from stockholders, demonstrating that stockholders already have an effective mechanism for recommending director candidates and that the Board thoughtfully considers qualified stockholder candidates.
Given the Board’s continuing commitment to ensuring effective corporate governance, as evidenced by our extensive interactions with our stockholders, and our adoption (and subsequent revision) of a robust proxy access bylaw that we believe reflects appropriate proxy access parameters consistent with stockholder input, best practices and the vast majority of U.S. public companies that have adopted proxy access, and by the other actions described above and elsewhere in this proxy statement, the Board believes that the changes to our proxy access framework contemplated by the stockholder proposal are not necessary and could be detrimental to our stockholders and stockholder value.
REQUIRED VOTE
 
 
 
 
 
The affirmative vote of a majority of the votes cast at the Annual Meeting at which a quorum is present, either in person or by proxy, is required to approve this proposal. If you hold your shares in your own name and abstain from voting on this

26qualcommlogoa04.jpg2017 Proxy Statement

Proposal 4: Stockholder Proposal

matter, your abstention will have no effect on the vote. If you hold your shares through a broker and you do not instruct the broker on how to vote on this proposal, your broker will not have the authority to vote your shares. Abstentions and broker non-votes will each be counted as present for purposes of determining the presence of a quorum but will not have any effect on the outcome of the proposal.
EFFECT OF THIS RESOLUTION
 
 
 
 
 
Because your vote is advisory, it will not be binding upon the Company or the Board. However, we value the opinions of our stockholders, and the Board will take into account the outcome of this vote when considering potential amendments to the proxy access provision of our Bylaws.
BOARD RECOMMENDATION
 
 
 
 
 
The Board believes that this stockholder proposal is not in the best interests of stockholders for the reasons discussed herein.
THE BOARD RECOMMENDS A VOTE “AGAINST” PROPOSAL 4.

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STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership of our common stock as of December 12, 2016 by: (i) each stockholder known to us to have greater than a 5% ownership interest (based solely on our review of Schedules 13D and 13G and Forms 13F filed with the SEC); (ii) each of our executive officers named in the Fiscal 2016 Summary Compensation Table under “Executive Compensation and Related Information” (the Named Executive Officers or NEOs); (iii) each current director and nominee for director; and (iv) all of our executive officers and directors as a group.
  
Amount and Nature of
Beneficial Ownership (1)
Name of Beneficial Owner
Number of
Shares
Percent of   
Class   
BlackRock, Inc.
107,319,296

7.10%
55 East 52nd Street
 
 
New York, NY 10055 (2)
 
 
Vanguard Group Inc.
101,454,047

6.74%
P.O. Box 2600, V26
 
 
Valley Forge, PA 19482-2600 (3)
 
 
Steve Mollenkopf (4)
254,526

*
George S. Davis (5)
99,227

*
Derek K. Aberle (6)
118,325

*
Paul E. Jacobs (7)
1,430,842

*
Brian Modoff (8)
7,881

*
Barbara T. Alexander (9)
28,150

*
Raymond V. Dittamore (10)
41,726

*
Jeffrey W. Henderson (11)
74

*
Thomas W. Horton (12)
17,786

*
Ann M. Livermore (13)
3,077

*
Harish Manwani (14)
—

*
Mark D. McLaughlin (15)
5,650

*
Clark T. Randt, Jr. (16)
748

*
Francisco Ros (17)
6,125

*
Anthony J. Vinciquerra (18)
1,567

*
All Executive Officers and Directors as a Group (21 persons) (19)
2,504,281

*
*
Less than 1%
(1)
The information for officers and directors in this table is based upon information supplied by those officers and directors. Unless otherwise indicated in the footnotes to this table and subject to community property laws where applicable, the Company believes that each of the stockholders named in this table has sole voting and investment power with respect to the shares indicated as beneficially owned. Applicable percentages are based on 1,478,597,180 shares outstanding on December 12, 2016, adjusted as required by rules promulgated by the SEC.
(2)
This information is as of December 31, 2015 and based on the Schedule 13G/A filed with the SEC by BlackRock, Inc. on February 10, 2016.
(3)
This information is as of December 31, 2015 and based on the Schedule 13G/A filed with the SEC by Vanguard Group Inc. on February 10, 2016.
(4)
Includes 254,526 shares held in family trusts.
(5)
Includes 99,227 shares held in family trusts.
(6)
Includes 101,051 shares issuable upon exercise of stock options exercisable within 60 days.

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Stock Ownership of Certain Beneficial Owners and Management

(7)
Includes 1,005,451 shares held in personal trusts, 950 shares held by his spouse, and 219,703 shares held in trusts for the benefit of his children. Also includes 204,738 shares issuable upon exercise of stock options exercisable within 60 days, of which all shares are held in trusts for the benefit of his children. Dr. Jacobs disclaims all beneficial ownership for the shares held in trusts for the benefit of his children.
(8)
Includes 7,881 shares held in family trusts.
(9)
Includes 27,968 shares held in family trusts and 182 fully vested deferred stock units and related dividend equivalents to be released within 60 days. Excludes 12,632 fully vested deferred stock units and dividend equivalents that settle three years after the date of grant.
(10)
Includes 7,400 shares held in family trusts and 6,326 held jointly with his spouse. Also includes 28,000 shares issuable upon exercise of stock options exercisable within 60 days. Excludes 16,838 fully vested deferred stock units and dividend equivalents that settle on March 7, 2017 and 4,622 fully vested deferred stock units and dividend equivalents shares that settle three years after the date of grant.
(11)
Excludes 4,622 fully vested deferred stock units and dividend equivalents that settle three years after the date of grant and 751 fully vested deferred stock units and dividend equivalents that settle on March 9, 2018.
(12)
Includes 15,286 shares held jointly with his spouse and 2,500 shares issuable upon exercise of stock options exercisable within 60 days. Excludes 10,374 fully vested deferred stock units and dividend equivalents that settle three years after the date of grant.
(13)
Includes 3,077 shares held in family trusts. Excludes 1,892 fully vested deferred stock units and dividend equivalents that settle on March 8, 2019.
(14)
Excludes 9,575 fully vested deferred stock units and dividend equivalents that settle three years after the date of grant.
(15)
Includes 5,650 shares held in family trusts. Excludes 5,953 fully vested deferred stock units and dividend equivalents that settle three years after the date of grant and 1,882 fully vested deferred stock units and dividend equivalents that settle on March 9, 2018.
(16)
Includes 748 shares held jointly with his spouse. Excludes 5,752 fully vested deferred stock units and dividend equivalents that settle on March 4, 2020 and 4,622 fully vested deferred stock units and dividend equivalent shares that settle three years after the date of grant.
(17)
Excludes 10,374 fully vested deferred stock units and dividend equivalents that settle three years after the date of grant.
(18)
Includes 1,567 shares held in family trusts. Excludes 1,882 fully vested deferred stock units and dividend equivalents that settle on March 9, 2018, 844 fully vested deferred stock units and dividend equivalents that settle on January 1, 2019 and 4,954 fully vested deferred stock units and dividend equivalent shares that settle upon retirement from the Board.
(19)
Includes 669,914 shares issuable upon exercise of stock options exercisable within 60 days. Also includes 182 fully vested restricted stock units, deferred stock units and dividend equivalents to be released within 60 days for all directors and executive officers as a group. Excludes 97,569 fully vested deferred stock units and related dividend equivalents.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
 
 
 
 
 
Section 16(a) of the Securities Exchange Act requires our directors, executive officers and persons who own more than 10% of a registered class of our equity securities to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock and other equity securities. Officers, directors and greater-than-10% stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file.
To our knowledge, based solely on a review of copies of such reports furnished to us and written representations that no other reports were required, all Section 16(a) filing requirements were complied with during 2016, except for the following: Dr. Jacobs filed a single Form 4 in 2016 which combined information for seven late reports covering a total of 15 transactions that were not reported on a timely basis in prior years, all of which were the result of late reporting by Dr. Jacobs’s broker of exempt gifts and Grantor Retained Annuity Trust (GRAT) dispositions. 

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Stock Ownership of Certain Beneficial Owners and Management

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
 
 
 
 
 
None of the members of our Compensation Committee are, or have been, employees or officers of the Company. During fiscal 2016, no member of the Compensation Committee had any relationship with us requiring disclosure under Item 404 of Regulation S-K. During fiscal 2016, none of our executive officers served on the compensation committee (or equivalent) or board of another entity that has or has had one or more executive officers who served on our Compensation Committee or Board.
EQUITY COMPENSATON PLAN INFORMATION
 
 
 
 
 
The following table sets forth information regarding outstanding equity awards and shares reserved for future issuance under our equity compensation plans as of September 25, 2016 (number of shares in thousands):
Plan Category
 
Number of Shares to be Issued Upon Exercise / Vesting of Outstanding Awards
 
Weighted Average Exercise Price of Outstanding Options (1)
 
Number of Shares Remaining Available for Future Issuance  
 
Equity compensation plans approved by stockholders (2)
 
48,847

(4)
$41.34
 
134,435

(5)
Equity compensation plans not approved by stockholders (3)
 
511

 
$26.75
 
—

  
Total
 
49,358

  
$40.96
 
134,435

  
(1)
Weighted Average Exercise Price of Outstanding Options does not include outstanding performance stock units, time-based restricted stock units and performance-based restricted stock units, all of which were granted under equity compensation plans approved by stockholders.
(2)
Consists of three Company plans: the 2006 Long-Term Incentive Plan, the 2016 Long-Term Incentive Plan and the Amended and Restated 2001 Employee Stock Purchase Plan.
(3)
Consists of equity compensation plans assumed in connection with mergers and acquisitions.
(4)
Includes approximately 31,331,000 shares that may be issued pursuant to performance stock units, time-based restricted stock units and performance-based restricted stock units granted under the 2006 Long-Term Incentive Plan and the 2016 Long-Term Incentive Plan. The performance stock units include the maximum number of shares that may be issued.
(5)
Includes approximately 20,395,000 shares reserved for issuance under the Amended and Restated 2001 Employee Stock Purchase Plan.

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CERTAIN RELATIONSHIPS AND RELATED-PERSON TRANSACTIONS
Our Code of Ethics states that our executive officers and directors, including their immediate family members, are charged with avoiding situations in which their personal, family or financial interests conflict with those of the Company. Our Conflicts of Interest and Outside Activities policy provides additional rules regarding the employment of relatives. In accordance with its charter, the Audit Committee is responsible for reviewing and approving transactions between the Company and any directors or executive officers or any of such person’s immediate family members or affiliates (other than employment and compensation related transactions, which are subject to review by the Compensation Committee), which would be reportable as a related-person transaction under SEC rules. In considering the proposed arrangement, the Audit Committee or Compensation Committee, as appropriate, will consider the relevant facts and circumstances and the potential for conflicts of interest or improprieties.
During fiscal 2016, we employed the family members of certain of our executive officers. The Compensation Committee reviewed and approved the related-person transactions below.
Those employees whose compensation (salary, cash incentives and grant date fair value of equity awards) exceeded $120,000 are discussed below, all of whom were adults who did not live with the related director or executive officer, except as otherwise described below. Each family member is compensated according to our standard practices, including participation in our employee benefit plans generally made available to employees of a similar responsibility level. We do not view any of the executive officers as having a beneficial interest in the compensation of family members described below that is material to them or the Company. Restricted stock units were granted under our 2006 Long-Term Incentive Plan and generally vest over three years from the grant date, contingent upon continued service with the Company.
Cristiano Amon’s brother, Rogerio Amon, serves as a Senior Director, Program Management, Qualcomm Technologies, Inc. During fiscal 2016, Rogerio Amon earned $195,395 in base salary and $4,945 in cash incentives and received restricted stock unit grants totaling 2,060 shares with an aggregate grant date fair value of $110,045.
Steve Mollenkopf’s brother, James D. Mollenkopf, serves as a Senior Director, Strategic Development, Qualcomm Technologies, Inc. During fiscal 2016, James D. Mollenkopf earned $236,454 in base salary and $7,295 in cash incentives and received restricted stock unit grants totaling 3,745 shares with an aggregate grant date fair value of $200,058.
Donald J. Rosenberg’s son-in-law, Dr. Lucian Iancovici, serves as a Manager, Ventures, Qualcomm Technologies, Inc. During fiscal 2016, Dr. Lucian Iancovici earned $177,431 in base salary and $2,580 in cash incentives and received restricted stock unit grants totaling 539 shares with an aggregate grant date fair value of $28,793.
Michelle M. Sterling shares her household with Mark E. Palamar, who serves as a Senior Director, IPR Enforcement. During fiscal 2016, Mark E. Palamar earned $222,695 in base salary and $6,400 in cash incentives and received restricted stock unit grants totaling 2,022 shares with an aggregate grant date fair value of $108,015.

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COMPENSATION COMMITTEE REPORT
The Compensation Committee reviewed and discussed the Compensation Discussion and Analysis (CD&A) with management. Based on this review and discussion, the Compensation Committee recommended to the Board that the CD&A be included in our 2017 Proxy Statement.
COMPENSATION COMMITTEE

Barbara T. Alexander, Chair
Harish Manwani
Mark D. McLaughlin

32qualcommlogoa04.jpg2017 Proxy Statement

EXECUTIVE COMPENSATION AND RELATED INFORMATION
COMPENSATION DISCUSSION & ANALYSIS
The Compensation Committee oversees our executive compensation program. This Compensation Discussion and Analysis section discusses this program and the compensation earned by or paid to our Named Executive Officers (NEOs) for fiscal 2016.
Summary
Fiscal 2016 Business Highlights
Fiscal 2016 was a year of transition as we executed on our Strategic Realignment Plan announced in fiscal 2015 and continued to invest in technology leadership and new growth areas. Our Qualcomm CDMA Technologies (QCT) and Qualcomm Technology Licensing (QTL) segments made progress in fiscal 2016 as QCT delivered on its improved operating margin target and QTL continued to execute new license agreements in China.
Strategic Realignment Plan. In the fourth quarter of fiscal 2015, we announced a Strategic Realignment Plan designed to improve execution, enhance financial performance and drive profitable growth as we work to create sustainable long-term value for stockholders. As part of this plan, we implemented a cost reduction plan, which included a series of targeted reductions across our businesses, particularly in QCT, and a reduction to annual share-based compensation grants. These cost reduction initiatives were achieved by the end of fiscal 2016.
Expanding Opportunities for Growth. We took steps to accelerate our technology positions in our priority growth segments of Internet of Things (IoT), automotive and networking. In January 2016, we announced our planned joint venture with TDK Corporation to enable delivery of radio frequency (RF) front-end modules and RF filters into fully integrated products for mobile devices and IoT applications, among others. Shortly after the end of fiscal 2016, we announced a definitive agreement to acquire NXP Semiconductors N.V. NXP is a leader in high-performance, mixed-signal semiconductor electronics in automotive, broad-based microcontrollers, secure identification, network processing and RF power products.
Executive Compensation Highlights
Responsive to Stockholders. In fiscal 2016, we continued the executive compensation program that received 94% support from our stockholders at the March 2016 annual meeting. The changes we described in last year’s proxy statement were made in response to stockholder feedback and further focused the Company on growing per share net income, reducing our share count, managing our share-based compensation expense and value-creating capital allocation. We continue to engage with our stockholders and to implement “best in class” compensation practices that align pay delivery with performance, set rigorous goals for delivering performance-based incentives and carve-out the value of special front-loaded equity awards granted for retention purposes in fiscal 2014 to maintain reasonable annualized total compensation opportunities.
Heavy Emphasis on Performance-Based Incentive Compensation. Approximately 94% of the target total direct compensation (TDC) for fiscal 2016 for our CEO and other NEOs was allocated to variable compensation that is at risk based on performance, including short- and long-term incentive compensation (as highlighted by the blue-shaded sections in the chart below).

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Compensation Discussion & Analysis

proxy2017_chart-10777.jpg
•
Annual Cash Incentive Plan (ACIP). Our ACIP for fiscal 2016 was based 40% on Adjusted Revenues and 60% on Adjusted Earnings Per Share (EPS). We placed greater weight on EPS to emphasize its relative importance to stockholder value creation. Performance during fiscal 2016 was strong relative to the goals that we set based on our internal budgets and forecasts. We achieved 99% of our Adjusted Revenues goal and exceeded our Adjusted EPS goal by 7%. Although we exceeded our combined budget-based financial goals, the ACIP payout rate for our NEOs was 78% of the target amount because the Compensation Committee increased the level of financial performance necessary for our executive officers to earn the ACIP target amounts as compared to prior years to recognize that the fiscal 2016 ACIP Adjusted Revenues objective was below the corresponding level of performance for fiscal 2015.
•
Long-Term Equity Awards. For fiscal 2016, as part of our regular, annual on-going program, we granted our NEOs performance-based stock unit awards (PSUs) based on return on invested capital (ROIC) and relative total shareholder return (TSR) to focus on strategic financial results, and time-vested restricted stock units (RSUs) for ownership and retention. The grant-date fair values of these awards were based on a number of factors, including the competitive labor markets, the NEO’s roles and responsibilities and the NEO’s performance and contributions to financial and strategic objectives, and. except for Mr. Modoff, were reduced by the annualized value of front-loaded amounts from fiscal 2014 that were attributable to fiscal 2016. Actual earned or realized value from these grants will reflect our performance for fiscal 2017 through fiscal 2019 that will be heavily dependent on our relative TSR, capital-allocation decisions, Strategic Realignment Plan accomplishments, initiatives to expand growth and continued progress with our licensing program.
•
Real Pay Delivery Aligned with Performance. Figure 10 on page 45 summarizes the relationship between our NEOs’ actual delivered compensation and Company performance. In the aggregate, our CEO’s pay delivery from the fiscal 2016 ACIP, relative TSR PSUs granted in fiscal 2014 with performance measures tied to fiscal 2016 and stock price performance for RSUs granted in fiscal 2014 was 57% of the aggregate target award amount. Our other NEOs’ (excluding Mr. Modoff) aggregate pay delivery was 55% of the aggregate target award amount. Actual earn outs of PSUs granted in fiscal 2014 that were based on performance for fiscal 2015 through 2016 were zero (as were PSUs granted in fiscal 2013 that were based on performance for fiscal 2014 through 2015), and the CEO’s realized value of RSUs granted in fiscal 2014 was 14% lower than the grant date values that were previously reported at the fiscal year-end stock price.

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Compensation Discussion & Analysis

This Compensation Discussion and Analysis is composed of the following sections:
 
Page
1. Our Named Executive Officers (NEOs) for Fiscal 2016
36
2. Program Overview
37
3. Fiscal 2016 Target Amounts and Compensation Mix
41
4. Fiscal 2016 Actual Amounts and Pay for Performance Analysis
44
5. Process and Rationale for Executive Compensation Decisions
48
6. Compensation Program Best Practices
52
7. Other Compensation Components
53
Detailed compensation tables that quantify and further explain our NEOs’ compensation follow this Compensation Discussion and Analysis.


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Compensation Discussion & Analysis

OUR NAMED EXECUTIVE OFFICERS (NEOs) FOR FISCAL 2016
Steve Mollenkopf
 
 
mollenkopfheadshotneo.jpg
 
Current position:
●  Chief Executive Officer (CEO), since March 2014
Prior Qualcomm positions include:
● CEO-Elect and President, 2013 - 2014
● President and Chief Operating Officer, 2011 - 2013

22 years of service with Qualcomm
 
 
 
George S. Davis
 
 
davisgeorgeheadshotneo.jpg
 
Current position:
● Executive Vice President and Chief Financial Officer (CFO), since March 2013

4 years of service with Qualcomm
 
 
 
Derek K. Aberle
 
 
aberlederekheadshotneo.jpg
 
Current position:
● President, since March 2014
Prior Qualcomm positions include:
● Executive Vice President and Group President, 2011 - 2014
● Executive Vice President and President, QTL, 2008 - 2011

16 years of service with Qualcomm
 
 
 
Paul E. Jacobs
 
 
jacobspaulheadshotneo.jpg
 
Current position:
●  Executive Chairman and Chairman of the Board, since March 2014
Prior Qualcomm positions include:
● Chairman of the Board and CEO, 2009 - 2014
●  CEO, 2005 - 2009

26 years of service with Qualcomm
 
 
 
Brian Modoff
 
 
modoffbrianheadshotneo.jpg
 
Current position:
●  Executive Vice President, Strategy and Mergers & Acquisitions, since October 2015

1 year of service with Qualcomm


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Compensation Discussion & Analysis

PROGRAM OVERVIEW
 
 
 
 
 
Primary Compensation Components
The Compensation Committee designed our fiscal 2016 executive compensation program to include salaries, bonuses (pursuant to our Annual Cash Incentive Plan (ACIP)) and long-term equity incentive awards. Figure 1 is an overview of the primary components of our fiscal 2016 executive compensation program, including the form, type and objective of each component. Collectively, these components comprise an executive’s total direct compensation (TDC). In structuring our cash and long-term equity incentive award programs, the Compensation Committee continued to use variations of non-GAAP performance measures as financial objectives. (See Appendix D for definitions of the various performance measures used in determining our cash and long-term equity incentive awards.)
Figure 1: Fiscal 2016 Executive Compensation Program Overview
 
Salary
Annual Cash Incentive Plan
Performance Stock Units
Restricted Stock Units
Form
Cash
Cash
Equity
Equity
Type
Fixed Compensation
Variable Compensation
Objective - Attract and Retain Talent
Competitive amounts that attract and retain executives who develop and execute business strategy
Provides an annual incentive by aligning a portion of our executive officers’ TDC to achieving the Company’s annual financial objectives
Provides a longer-term incentive by aligning a portion of our executive officers’ TDC to long-term absolute and relative Total Shareholder Return (TSR) and efficient use of capital
Provides a longer-term incentive by aligning a portion of our executive officers’ TDC to long-term absolute TSR
Objective - Pay Delivery Aligned with Stockholders Interests
 
Payouts may vary from 0 to 2x target amount based on performance targets aligned with financial metrics
Payouts may vary from 0 to 2x target amount based on performance targets aligned with stock price performance or financial metrics
Realized value of award amount varies with stock price performance and dividends
Objective - Performance Measures that Support or Result from the Execution of Strategy


● Adjusted Revenues performance (weighted 40%)
● Adjusted Earnings Per Share (EPS) performance (weighted 60%)
● Relative TSR compared to NASDAQ-100 (50% of total PSU awards) (RTSR PSUs)
● Average Annual Adjusted Return On Invested Capital (ROIC) (50% of total PSU awards) (ROIC PSUs)
Vests based on continued service or satisfying Normal Retirement requirements and achievement of an adjusted GAAP operating income objective
Objective - Performance Periods that in total Balance Short- and Long-Term
 
Fiscal 2016
3 year performance period with 3 year cliff vest
6-month performance objective with annual vesting over 3 years

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Compensation Discussion & Analysis

Other objectives of our executive compensation program include:
•
Tax efficiency for the Company. Salaries are deductible, except for the portion of the CEO’s salary in excess of $1 million. The Compensation Committee designs the ACIP and executive equity awards to comply with the requirements for tax deductibility under Internal Revenue Code Section 162(m) (Section 162(m)).
•
Internally fair and equitable. The Compensation Committee considers business and individual factors to evaluate internal fairness and equitability of compensation and monitors the internal compensation relationships among our executive officers. However, the Compensation Committee does not use predetermined formulas as part of this evaluation and monitoring (e.g., formulas that set other executive officers’ pay as a percentage of our CEO’s pay or the CEO’s pay as a multiple of our other executive officers’ pay).
•
Competitive for the business. The Compensation Committee attempts to set our executive compensation at competitive levels to attract, motivate, engage and retain executives. The Compensation Committee considers competitive practices of peer companies as reference points for comparative purposes, but does not set specific benchmark percentile objectives.
•
High standards for governance and risk management. The Compensation Committee designs our executive compensation to achieve high standards of governance and risk management. It reviews annually the amounts of all components of compensation and conducts a risk mitigation review. In addition, the ACIP includes a cash incentive compensation repayment (“clawback”) policy. Further, the Executive Chairman must hold net after-tax shares from the fiscal 2014 front-loaded RSUs past the one-year anniversary of the date he reaches normal retirement age, defined in the 2006 Long-Term Incentive Plan as age 60 and completion of ten consecutive years of service. See the discussion titled “Fiscal 2014 Front-loaded Restricted Stock Units to Maintain Leadership Continuity/Impact on Equity Compensation in Subsequent Years” under the section “Process and Rationale for Executive Compensation Decisions” on page 50 for a description of the fiscal 2014 front-loaded RSUs.
In addition to TDC, we have competitive health and welfare benefits that are generally structured in the same manner for all U.S. executives and/or employees, plus several other benefits. A summary of these benefits begins on page 53 with Figures 15 and 16.
Additional Detail Regarding Certain Compensation Components
Annual Cash Incentive Plan (ACIP)
The ACIP provides for a cash bonus based on the Company’s achievement of specified financial objectives, namely Adjusted Revenues and Adjusted EPS. Consistent with prior years, the Compensation Committee used the Adjusted Revenues measure because top-line growth is an important factor in stockholder value creation. In fiscal 2016, the Compensation Committee used the Adjusted EPS measure, which includes share-based compensation expense, rather than the adjusted operating income measure used in prior years, because it believes that an Adjusted EPS metric encourages our executive officers to focus on (1) growing per share net income (a perspective not captured by operating income alone); (2) reducing our outstanding share count; and (3) managing our share-based compensation expense. In addition, as a stockholder safeguard, the Adjusted EPS calculation excludes any share repurchases that were not anticipated in establishing the ACIP target. The Adjusted Revenues measure is weighted 40%, and the Adjusted EPS measure is weighted 60% to emphasize the relative importance of EPS to stockholder value creation.
The Compensation Committee increased the level of financial performance necessary for our executive officers to earn the ACIP target amounts as compared to prior years because the fiscal 2016 ACIP Adjusted Revenues objective, while in line with the budget approved by the Board, was below the corresponding level of financial performance for fiscal 2015. The fiscal 2016 ACIP financial objectives were set based on the anticipation that the QCT business would continue to be negatively impacted by a shift in share among our customers within the premium tier, a decline in share at a large customer and increased competition in China. In addition, despite the resolution with the China National Development and Reform Commission in fiscal 2015, we expected our QTL business would continue to be impacted by certain licensees in China not fully complying with their contractual obligations to report their sales of licensed products to us, and certain companies, including unlicensed companies, delaying execution of new license agreements. We believed that the conclusion of new agreements with these licensees would result in improved reporting by these licensees, however, litigation and/or other actions may be necessary.
As a result, the Company needed to achieve 110.5% of these financial objectives in order for our executive officers to earn the fiscal 2016 ACIP target amounts, compared to fiscal 2015 when the Company needed to achieve 100% of the relevant financial objectives to earn the ACIP target amounts. Achieving 100% of the financial objectives in fiscal 2016 would have

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Compensation Discussion & Analysis

resulted in our executive officers earning 65% of the ACIP target amounts. Specifically, our fiscal 2016 ACIP Adjusted Revenues objective was $23.7 billion, which was below the $25.3 billion in Adjusted Revenues achieved in fiscal 2015. Accordingly, the Compensation Committee adjusted the payout structure so that the target revenue payout would be achieved if Adjusted Revenues for fiscal 2016 were $26.2 billion, which is 3.8% above the $25.3 billion revenue result for fiscal 2015 (110.5% of the revenue objective). We cannot compare the fiscal 2016 ACIP Adjusted EPS objective to fiscal 2015 performance because it was not a measure in fiscal 2015.
The funding rate is based on the weighted financial performance, such that for each one percent that the weighted financial performance exceeds 100% of the objective, the funding rate increases by 0.0333 from the funding rate of 0.65 up to a maximum of 2.00 if weighted financial performance is 140.5% of the objective. For each one percent that the weighted financial performance falls short of the 100% objective, the funding rate decreases by 0.05 from the funding rate of 0.65, which would reach zero for weighted financial performance at or below 87% of the objective.
To maximize tax deductibility, amounts earned under the ACIP are designed to qualify as performance-based compensation under Section 162(m). This design provides that if certain financial objectives are met, our executive officers may receive up to 2x their target amounts, subject to the Compensation Committee’s negative discretion to pay any amount less than that maximum.
The Compensation Committee was authorized under the fiscal 2016 ACIP to modify Adjusted Revenues and Adjusted EPS in calculating the financial performance on which fiscal 2016 ACIP awards were determined. Modifications are intended to eliminate the distorting effects of certain unusual income or expense items if the Compensation Committee determined, in its discretion, that the items did not reflect a fair measurement of our operating performance. The Compensation Committee did not make any such modifications for fiscal 2016.
Long-Term Equity Incentives
In fiscal 2016, the Compensation Committee granted equity to our executive officers in the form of Relative Total Shareholder Return (RTSR) Performance Stock Units (PSUs), Return On Invested Capital (ROIC) PSUs and Restricted Stock Units (RSUs), as described below. Both the RTSR and ROIC PSUs include dividend equivalent rights that accrue in the form of additional shares with vesting and distribution at the same time as the underlying PSUs.
Performance Stock Units
The RTSR PSUs allow the recipients to earn a variable number of shares of our common stock based on the relative performance of our TSR compared to that of the companies comprising the NASDAQ-100 over a three-year period according to the payout schedule set forth in Figure 2. The RTSR PSUs have a robust performance schedule that requires achievement of performance in the 60th percentile in order to earn the target number of shares, and no shares would be earned if performance is below the 33rd percentile. The RTSR PSUs also provide that the total number of shares earned may not exceed the target number of shares if our absolute TSR for the entire three-year performance period is negative. This provision considers stockholders’ interests by limiting the number of shares that may be earned in the event relative TSR performance is strong despite a declining stock price.
Figure 2: RTSR PSUs Payout Schedule
Award Level
Qualcomm’s TSR Percentile Rank Among the NASDAQ-100
Multiple of Target RTSR PSUs Earned
(1)
Maximum Award Level
90th percentile and above
2x
Target Award Level
60th percentile
1x
Threshold Award Level
33rd percentile
0.33x
Below Threshold
Below 33rd percentile
No shares earned
(1)
The multiple of target RTSR PSUs earned between the award levels interpolates linearly with our TSR percentile ranking.
The ROIC PSUs allow the recipients to earn a variable number of shares of our common stock based on the achievement of a three-year Adjusted ROIC objective established by the Compensation Committee at the time of grant. While ROIC is a common financial term, there are numerous methods for calculating ROIC-based measures. We calculate our Adjusted ROIC by averaging over the three-year performance period (a) Adjusted After-Tax Operating Income divided by (b) the sum of average Adjusted Debt and average Adjusted Equity for the relevant year. (See Appendix D for the definitions of

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Compensation Discussion & Analysis

performance measures to be used in determining the number of PSUs for the relevant performance period.) The payout schedule is set forth in Figure 3. The Compensation Committee intended that the target chosen for measuring performance under the ROIC PSUs would generally present a similar degree of difficulty for achievement in comparison to the target chosen in recent years. The process for determining the target included consideration of our strategic plans, historical performance and peer company benchmarking.
Figure 3: ROIC PSU Payout Schedule
Award Level
Average Annual Adjusted ROIC
for the 3-year Performance Period
Multiple of Target ROIC PSUs Earned
(1)
Maximum Award Level
Adjusted ROIC is at or above 120% of Target
2x
Target Award Level
Adjusted ROIC is at Target
1x
Threshold Award Level
Adjusted ROIC is 80% of Target
0.33x
Below Threshold
Adjusted ROIC is less than 80% of Target
No shares earned
(1)
The multiple of target ROIC PSUs earned between the award levels interpolates linearly with our average annual Adjusted ROIC.
Restricted Stock Units
RSUs generally vest in equal annual installments over three years and include reinvested dividend equivalent rights. The RSUs also include a requirement that the Company must meet an adjusted GAAP operating income objective in order for them to vest, which is intended to qualify the RSUs for tax deductibility under Section 162(m). The Compensation Committee intended that the targets chosen for measuring performance under the RSUs would generally present a similar degree of difficulty for achievement in comparison to the targets chosen in recent years.
Compensation Related Changes
Retirement Provisions
Effective for equity awards granted beginning in the fourth quarter of fiscal 2016, the Compensation Committee adopted the following retirement-related provisions for our executive officers:
“Normal Retirement” is defined to be age 55 with a minimum of 10 years continuous service. Upon termination of employment under Normal Retirement, for grants that have been outstanding for at least six months:
•
RSUs will become fully vested and distributed according to the original vesting schedule.
•
PSUs will become fully vested and paid out at the end of the performance period, based upon and subject to achievement of the relevant performance objectives.
These provisions encourage continuous employment (a) until achieving Normal Retirement so as to benefit from the favorable vesting and (b) after achieving Normal Retirement so as to benefit from additional equity awards that may be granted with the more favorable vesting provisions.

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Compensation Discussion & Analysis

FISCAL 2016 TARGET AMOUNTS AND COMPENSATION MIX
 
 
 
 
 
Target Compensation Amounts
Steve Mollenkopf (CEO), George Davis (CFO) and Paul Jacobs (Executive Chairman)
The Compensation Committee maintained Messrs. Mollenkopf’s and Davis’s and Dr. Jacobs’s fiscal 2016 target TDC amounts at fiscal 2015 levels (see Figure 4). In doing so, the Compensation Committee considered the Company’s 2016 outlook and fiscal 2015 performance, retention actions the Compensation Committee took in fiscal 2014 and our peer company practices.
Figure 4: Target Total Direct Compensation for CEO, CFO and Executive Chairman
 
Fiscal 2016 Compensation
Fiscal 2014 Front-Loaded RSUs (1)
 
Name
Base Salary
($)
ACIP Target
($)
Aggregate Value of Equity Granted
($)
Annualized Grant Date Fair Value Attributed to Fiscal 2016
($)
Total Target Direct Compensation
($)
Steve Mollenkopf
1,130,000

2,260,000

8,000,000

6,000,000

17,390,000

George S. Davis
760,000

988,000

2,700,000

2,300,000

6,748,000

Paul E. Jacobs
1

N/A

9,000,000

9,000,000

18,000,001

(1)
See the discussion titled “Fiscal 2014 Front-loaded Restricted Stock Units to Maintain Leadership Continuity/Impact on Equity Compensation in Subsequent Years” under the section “Process and Rationale for Executive Compensation Decisions” on page 50 for a description of the fiscal 2014 front-loaded RSUs.
Dr. Paul Jacobs’s Role as Executive Chairman
As previously disclosed, in 2014, the Compensation Committee revised compensation packages for our senior leaders to protect the Company from the increasingly competitive environment for executive talent in our industry. As part of these retention efforts, the Board also accelerated our executive management succession plan, which resulted in new roles for Paul Jacobs, who became Executive Chairman, and Steve Mollenkopf, who was promoted to CEO. In the Board’s view, it was imperative to find a way to continue the long-term partnership between Dr. Jacobs, Mr. Mollenkopf and Derek Aberle, and to keep Dr. Jacobs engaged and involved in the leadership of the business.
A key element of retaining Mr. Mollenkopf was Dr. Jacobs’s agreeing to relinquish the CEO title and adopt the role of Executive Chairman. In this capacity, Dr. Jacobs focuses on long-term opportunities in emergent areas and manages certain of our relationships with key partners around the world, in addition to his responsibilities as Chairman of the Board. Those in the industry know him as a genuine pioneer and visionary, having been a key factor in the development of mobile communications technology. Dr. Jacobs was regularly recognized by Institutional Investor as a top CEO in our sector throughout his tenure. The Compensation Committee believes that investors have embraced the value of our executive team structure and appreciate that we are able to keep Dr. Jacobs focused on these long-term opportunities, while Mr. Mollenkopf sets corporate strategy, leads the operations of the Company, oversees product development and manages global relationships.
As an example of the value our stockholders derived from this executive partnership during fiscal 2016, Dr. Jacobs served in a key role on the Board’s special committee that conducted a comprehensive review of the Company’s corporate and financial structure, the Board’s special committee on mergers and acquisitions that recommended the proposed acquisition of NXP, and focused and facilitated initiatives on compliance.
Dr. Jacobs’s compensation package was specifically designed, in consultation with the Compensation Committee’s independent compensation consultant, to be entirely performance-based and at a reasonable cost to stockholders in actual pay delivery for their continued benefit from his contributions. Dr. Jacobs’s annual salary is $1, and he has no annual cash incentive opportunity. The Compensation Committee does not presently anticipate providing Dr. Jacobs with additional cash compensation or RSUs until he is again eligible to receive RSUs in fiscal 2019.

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Compensation Discussion & Analysis

Derek Aberle (President)
During fiscal 2016, the Compensation Committee reviewed Mr. Aberle’s compensation relative to peer companies and other executive officers in light of his evolving role that requires increased focus on licensing agreements with device manufacturers, particularly in China, and strategy development for our emerging businesses. As a result, the Compensation Committee increased his base salary effective February 16, 2016 and increased his ACIP target effective for the full fiscal year. The Compensation Committee also increased his target equity, which included RTSR and ROIC PSUs granted in February 2016 with an aggregate grant date fair value of $1,025,000, as well as RTSR and ROIC PSUs with an aggregate grant date fair value of $3,780,000 granted at the end of September 2016 consistent with our normal equity grant cycle for executive officers.
Further, in July 2016, the Compensation Committee granted Mr. Aberle a Performance Unit Award (PUA) pursuant to which he is eligible to earn aggregate cash payments of up to $10 million if the Company executes certain agreements with certain licensees or unlicensed companies, and if Mr. Aberle continues to provide services to the Company through October 1, 2017. The Compensation Committee granted the PUA to reflect, among other things, the significant financial and business benefits to the Company of executing new license agreements with some of the largest device manufacturers in Asia, particularly China; that licensing compliance is a strategic focus, and critical to the success, of the Company; and Mr. Aberle’s anticipated important contributions toward achieving these goals. In general, 50% of the amount attributable to the achievement of a performance goal is payable when the performance goal is satisfied, and the remaining 50% is payable on October 1, 2017, subject to Mr. Aberle’s continued employment with the Company through such date. Earned but unpaid amounts would also be paid upon a termination without cause or for good reason, or upon death or disability. 
Figure 5 summarizes the increases to Mr. Aberle’s target compensation, excluding potential amounts under his PUA because it is a one-time arrangement that is not part of his ongoing, target direct compensation.
Figure 5: Target Total Direct Compensation for President
 
Fiscal 2016 Compensation
Fiscal 2014 Front-Loaded RSUs (2)
 
Fiscal Year
Base Salary
($) (1)
ACIP Target
($)
Aggregate Value of Equity Granted
($)
Annualized Grant Date Fair Value Attributed to Fiscal 2016
($)
Total Target Direct Compensation ($)
2015
800,000

1,080,000

3,780,000

3,220,000

8,880,000

2016
925,000

1,618,750

4,805,000

3,220,000

10,568,750

(1)
Represents the annualized base salary rate in place at the end of the fiscal year.
(2)
See the discussion titled “Fiscal 2014 Front-loaded Restricted Stock Units to Maintain Leadership Continuity/Impact on Equity Compensation in Subsequent Years” under the section “Process and Rationale for Executive Compensation Decisions” on page 50 for a description of the fiscal 2014 front-loaded RSUs.
Brian Modoff (EVP, Strategy and M&A)
Mr. Modoff joined Qualcomm in October 2015 with (a) a base salary of $600,000, (b) a fiscal 2016 ACIP target of 100% of his base salary, (c) a new hire equity package with an aggregate grant date fair value of $2,750,018, which provided an inducement to join Qualcomm and (d) a sign-on retention bonus of $1,000,000, which was paid to him shortly after his employment commenced and has payback provisions should he voluntarily terminate employment prior to the second anniversary of his employment start date. The new hire equity package included RSUs that vest in three equal annual installments and RTSR and ROIC PSUs that cliff-vest in October 2018. In order to qualify as “performance-based compensation,” the RSUs were subject to an additional performance objective adopted by the Compensation Committee on September 25, 2015, which has since been achieved. Mr. Modoff also received ongoing equity grants in the form of RTSR and ROIC PSUs and RSUs with an aggregate grant date fair value of $2,750,089 at the end of September 2016 consistent with our normal equity grant cycle for executive officers.


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Compensation Discussion & Analysis


Target Compensation Mix
Figure 6 illustrates the relative contribution of each compensation component to our CEO’s target TDC. The target TDC includes base salary, the ACIP target amount, the grant date fair value of RTSR and ROIC PSUs awarded in fiscal 2016 and the annualized value of the fiscal 2014 front-loaded RSUs. A substantial portion (94%) of Mr. Mollenkopf’s target TDC was attributable to incentive compensation that varies with financial performance and stock price.
Figure 6: CEO Target Total Direct Compensation Mix
proxy2017_chart-33363a01.jpg
Figure 7 illustrates the relative contribution of each compensation component to our other NEOs’ aggregate target TDC. This figure excludes amounts that may be earned by Mr. Aberle under the PUA as well as Mr. Modoff’s sign-on retention bonus and equity awards included in his new hire package because these are one-time arrangements that are not part of ongoing, target direct compensation.
Figure 7: Other NEOs’ Aggregate Target Total Direct Compensation Mix
proxy2017_chart-36642a01.jpg

2017 Proxy Statement    qualcommlogoa04.jpg    43

Compensation Discussion & Analysis

FISCAL 2016 ACTUAL AMOUNTS AND PAY FOR PERFORMANCE ANALYSIS
 
 
 
 
 
Compensation Awarded or Paid in Fiscal 2016
Figure 8 is a summary of TDC earned by or granted to our NEOs in fiscal 2016. These amounts include annualized amounts of the fiscal 2014 front-loaded RSUs that we attribute to fiscal 2016 compensation, and thus the amounts below differ from the amounts shown in the Summary Compensation Table. The Compensation Committee, at its discretion, increased Mr. Davis’s ACIP earnings by $100,000 to recognize his contributions to our Strategic Realignment Plan and the efforts that led to the definitive agreement to acquire NXP Semiconductors N.V. The other NEOs’ ACIP earnings reflect the 78% of target payout rate noted in the Summary on page 34 and in Figure 11.
Figure 8: Fiscal 2016 Compensation
 
Fiscal 2016 Compensation
Fiscal 2014 Front-Loaded RSUs (3)
 
Name
Salary Earnings
($) (1)
ACIP Earnings
($)
Aggregate Value of Equity Granted
($)
Other Awards
($) (2)
Annualized Grant Date Fair Value Attributed to Fiscal 2016
($)
Total Direct Compensation
($)
Steve Mollenkopf
1,138,694

1,762,000

8,000,114

—

6,000,000

16,900,808

George S. Davis
760,011

870,640

2,700,080

—

2,300,000

6,630,731

Derek Aberle
889,438

1,262,625

4,805,111

3,375,000

3,220,000

13,552,174

Paul E. Jacobs
1

N/A

9,000,028

—

9,000,000

18,000,029

Brian Modoff
542,324

468,000

5,500,197

1,000,000

N/A

7,510,521

(1)
The amount for Mr. Aberle reflects his salary increase from $800,000 to $925,000 effective February 16, 2016.
(2)
The amount shown for Mr. Aberle reflects the portion of his Performance Unit Award (PUA) that was earned or paid in fiscal 2016. Specifically, during fiscal 2016, the Company achieved certain of the performance goals under the PUA by executing license agreements with four large device manufacturers identified in the PUA, which resulted in an aggregate of $6,750,000 of potential payments to Mr. Aberle, of which 50% ($3,375,000) has been paid. Of the amount paid, $1,375,000 was designated as a discretionary bonus because the performance goals relative to two of the device manufacturers were achieved prior to the actual execution of the PUA, and $2,000,000 was designated as Non-Equity Incentive Plan compensation. The other 50% ($3,375,000) will be paid to Mr. Aberle on October 1, 2017, subject to his continued employment with the Company through that date. As of the end of fiscal 2016, Mr. Aberle is eligible to earn up to the remaining $3,250,000 pursuant to the PUA upon achievement of the remaining performance goals and satisfaction of the service condition. The amount shown for Mr. Modoff reflects the sign-on bonus he received upon joining the Company in October 2015.
(3)
See the discussion titled “Fiscal 2014 Front-loaded Restricted Stock Units to Maintain Leadership Continuity/Impact on Equity Compensation in Subsequent Years” under the section “Process and Rationale for Executive Compensation Decisions” on page 50 for a description of the fiscal 2014 front-loaded RSUs.
Summary of Grant Date Fair Values of Fiscal 2016 Equity Awards
Figure 9 shows the grant date fair values of the equity awards approved by the Compensation Committee during fiscal 2016. As described on page 50, the equity compensation amounts for our NEOs, except Mr. Modoff, who was hired in October 2015, were lower in fiscal 2015 and 2016 as a result of front-loaded RSUs that were granted in fiscal 2014.

44qualcommlogoa04.jpg2017 Proxy Statement

Compensation Discussion & Analysis

Figure 9: Grant Date Fair Values of Equity Awarded to NEOs in Fiscal 2016
Name
RTSR PSUs ($)
ROIC PSUs ($)
RSUs ($)
Total ($)
Steve Mollenkopf
4,000,069
4,000,045
—
8,000,114
George S. Davis
1,350,026
1,350,054
—
2,700,080
Derek K. Aberle
2,402,538
2,402,573
—
4,805,111
Paul E. Jacobs
4,500,017
4,500,011
—
9,000,028
Brian Modoff
1,485,079
1,485,081
2,530,037
5,500,197
Pay for Performance
Figure 10 illustrates the impact of fiscal 2016 Company performance on the cash and equity compensation awarded to our NEOs by comparing the target amounts to (a) the ACIP actual earnings, (b) the value of shares earned from fiscal 2014 RTSR PSUs with measurement periods completed in fiscal 2016 and (c) the annualized grant date fair value of front-loaded RSUs awarded in fiscal 2014. We excluded Mr. Modoff from the illustration because he did not receive fiscal 2014 RTSR PSUs or fiscal 2014 front-loaded RSUs, and we excluded Mr. Aberle’s PUA because it is a one-time arrangement that is not part of his ongoing, direct compensation.
Figure 10: Impact of Company Financial and Stock Performance on ACIP Earnings and Equity Compensation
Name
Pay Component
Effective Date / Grant Date
Target Amount / Annualized RSU Amount ($) (1)
Cash Earned / Value of Equity Awards at Fiscal 2016 Year End
($) (2)
Percent of Target / Annualized RSU Amount
Steve Mollenkopf
Fiscal 2016 ACIP
Fiscal 2016
2,260,000

1,762,000

78
%
 
Fiscal 2014 Front-Loaded RSUs
12/12/2013
6,000,000

5,176,687

86
%
 
Fiscal 2014 RTSR PSUs
9/16/2014
4,000,000

—

—

 
Total
 
12,260,000

6,938,687

57
%
George S. Davis
Fiscal 2016 ACIP
Fiscal 2016
988,000

870,640

88
%
 
Fiscal 2014 Front-Loaded RSUs
5/5/2014
2,300,000

1,814,040

79
%
 
Fiscal 2014 RTSR PSUs
9/16/2014
1,350,000

—

—

 
Total
 
4,638,000

2,684,680

58
%
Derek K. Aberle
Fiscal 2016 ACIP
Fiscal 2016
1,618,750

1,262,625

78
%
 
Fiscal 2014 Front-Loaded RSUs
5/5/2014
3,220,000

2,539,656

79
%
 
Fiscal 2014 RTSR PSUs
9/16/2014
1,890,000

—

—

 
Total
 
6,728,750

3,802,281

57
%
Paul E. Jacobs
Fiscal 2016 ACIP
Fiscal 2016
N/A

N/A

N/A

 
Fiscal 2014 Front-Loaded RSUs
5/5/2014
9,000,000

7,098,418

79
%
 
Fiscal 2014 RTSR PSUs
9/16/2014
4,500,000

—

—

 
Total
 
13,500,000

7,098,418

53
%
Aggregate excluding CEO
 
24,866,750

13,585,379

55
%
(1)
Fiscal 2016 ACIP: Target amounts the NEOs would receive for achieving 110.5% of the relevant financial objectives.
Fiscal 2014 Front-Loaded RSUs: One-fifth of the grant date fair values for Messrs. Mollenkopf and Aberle and Dr. Jacobs, and one-third of the grant date fair value for Mr. Davis.
Fiscal 2014 RTSR PSUs: 50% of the target grant date fair values to reflect that two of the four interim measurement periods have been completed and each interim measurement period is allocated 25% of the grant date fair value.

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Compensation Discussion & Analysis

(2)
Fiscal 2016 ACIP: Amounts awarded by the Compensation Committee following completion of fiscal 2016.
Fiscal 2014 Front-Loaded RSUs: Fiscal year-end values for (i) one-fifth of the number of front-loaded RSUs granted to Messrs. Mollenkopf and Aberle and Dr. Jacobs and (ii) one-third of the number of front-loaded RSUs granted to Mr. Davis, excluding dividend equivalents.
Fiscal 2014 RTSR PSUs: The fiscal year-end values for one-half of the number of RTSR PSUs granted, excluding dividend equivalents.
Note: Impact of Fiscal 2014 Equity Awards
The fiscal 2014 RTSR PSUs have a three-year performance period covering fiscal 2015 through 2017 that includes four interim measurement periods of 18, 24, 30 and 36 months. We allocated 25% of the target PSU award to each measurement period. The 18- and 24-month measurement periods were completed on March 27, 2016 and September 25, 2016, respectively. The NEOs who received a fiscal 2014 RTSR PSU award did not earn any shares of our common stock for the 18-month and 24-month performance periods.
Fiscal 2016 ACIP Earnings
As previously noted, the Compensation Committee increased the level of financial performance necessary for our executive officers to earn the fiscal 2016 ACIP target amounts as compared to prior years because the fiscal 2016 ACIP financial objectives were below the corresponding level of financial performance for fiscal 2015. As a result, the Company needed to achieve 110.5% of the fiscal 2016 ACIP financial objectives in order for our executive officers to earn the fiscal 2016 ACIP target amounts, compared to fiscal 2015 when the Company needed to achieve 100% of the relevant financial objectives to earn the ACIP target amounts. Specifically, the fiscal 2016 Adjusted Revenues objective of $23.7 billion was below fiscal 2015 Adjusted Revenues performance of $25.3 billion. The Company needed to achieve 110.5% of the fiscal 2016 Adjusted Revenues objective, or $26.2 billion (which is 3.8% above fiscal 2015 Adjusted Revenues performance) for our executive officers to earn the target payout rate of 1.00.
Figure 11: Fiscal 2016 ACIP Target, Performance-Adjusted and Earned Amounts
Name
ACIP Target
($)
Payout Rate
Performance-Adjusted Amount
($)
Earned Amount Approved by Compensation Committee
($)
Steve Mollenkopf
2,260,000

0.78
1,762,800

1,762,000

George S. Davis
988,000

0.78
770,640

870,640

Derek K. Aberle
1,618,750

0.78
1,262,625

1,262,625

Paul E. Jacobs
N/A

N/A
N/A

N/A

Brian Modoff
600,000

0.78
468,000

468,000

How the Fiscal 2016 ACIP Earnings were Determined
Figure 12 shows the objectives and performance levels for Adjusted Revenues and Adjusted EPS and illustrates the following:
•
The Compensation Committee applied a relative weighting of 40% to Adjusted Revenues and 60% to Adjusted EPS to emphasize the relative importance of EPS to stockholder value creation.
•
The NEOs needed to achieve 110.5% of the weighted objectives to earn their ACIP target amounts; they would earn only 65% of their ACIP target amounts for achieving 100% of the weighted objectives.
•
Adjusted Revenues performance was 99% of the objective and Adjusted EPS performance was 107% of the objective.
•
Accordingly, our weighted performance was 104% [(99% x 40%) + (107% x 60%)], and the payout rate was 78%.

46qualcommlogoa04.jpg2017 Proxy Statement

Compensation Discussion & Analysis

•
The NEOs received ACIP amounts based on the 78% payout rate, except Dr. Jacobs, who was not eligible to participate. In addition, Mr. Davis received a discretionary award of $100,000 to recognize his contributions to our Strategic Realignment Plan and the efforts that led to the definitive agreement to acquire NXP Semiconductors N.V.
Figure 12: Fiscal 2016 ACIP Financial Objectives and Performance
 
 
Threshold
 
Target
 
 
 
 
Maximum
 
Performance
 
Weight
 
 
 
Wtg. Perf.
Adjusted Revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Performance Range
 
$20.65B
 
$23.73B
 
 
 
 
$33.34B
 
99%
 
40%
 
 
 
39.6%
Actual Performance
 
 
 
$23.51B
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EPS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Performance Range
 
$3.19
 
$3.67
 
 
 
 
$5.16
 
107%
 
60%
 
+
 
64.4%
Actual Performance
 
 
 
 
 
 
$3.94
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted Performance
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Performance Range
 
87%
 
100%
 
110.5%
 
140.5%
 
 
 
 
 
=
 
104%
Actual Performance
 
 
 
 
 
 
104%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Payout Rate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Below Target Range
Payout Range % of Target
 
—%
 
65%
 
100%
 
200%
 
 
 
At Target
Payout Rate
 
 
 
 
 
 
78%
 
 
 
 
 
 
 
 
Above Target Range
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


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Compensation Discussion & Analysis

PROCESS AND RATIONALE FOR EXECUTIVE COMPENSATION DECISIONS
 
 
 
 
 
The Compensation Committee considers several factors in determining the compensation of our executive officers. The Compensation Committee does not have a predefined framework that determines which of these factors may be more or less important, and the emphasis placed on specific factors may vary among our executive officers. Ultimately, it is the Compensation Committee’s judgment about these factors that forms the basis for determining our executive officers’ compensation.
Late in the fourth quarter of each fiscal year, the Compensation Committee sets salaries and ACIP targets for the next fiscal year and makes annual equity awards with respect to performance for the nearly completed fiscal year. This allows the Compensation Committee to consider anticipated absolute and relative financial performance and total shareholder returns for that year. Since equity compensation is the largest component of compensation for our executive officers, granting awards after the annual meeting of stockholders (which takes place during the second quarter of the fiscal year) allows the Compensation Committee to consider feedback from stockholders (through the annual “Say-on-Pay” advisory vote) and to align annual equity awards more closely with the performance for the fiscal year in which the awards are granted.
Based on the following factors, the Compensation Committee, in executive session without the CEO present, decided and approved the CEO’s and other executive officers’ fiscal 2016 equity award amounts, any application of negative discretion for the fiscal 2016 ACIP earned amounts and any adjustments to base salaries and ACIP targets for fiscal 2017.
The Compensation Committee reviews the Executive Officers’ performance using a multi-faceted process.
The Compensation Committee reviews the performance and compensation amounts for the CEO and other executive officers, as follows:
•
Members of the Compensation Committee regularly engage with our executive officers, providing opportunities for the Compensation Committee to consider the leadership contributions of the CEO and other executive officers to the Company’s annual and longer-term performance;
•
The Compensation Committee and the CEO discuss our business performance, the CEO’s performance and the CEO’s evaluation of and compensation recommendations for the other executive officers (excluding Dr. Jacobs); and
•
The CEO and other executive officers prepare self-evaluations, which highlight key strategic and operational accomplishments and leadership actions that communicate, promote and support Qualcomm’s ethical standards and compliance culture. The Compensation Committee and the CEO meet in executive session to review the self-evaluations and the CEO’s assessment of his and the other executive officers’ (excluding Dr. Jacobs) accomplishments and opportunities for improvement, including an assessment of overall performance and potential for future roles.
The Compensation Committee considers internal pay equitability in light of business and individual performance.
Our executive officers’ compensation levels are intended to be internally fair and equitable relative to roles, responsibilities and relationships, in addition to being competitively reasonable. Accordingly, the Compensation Committee considers the following factors in determining our executive officers’ compensation:
•
The Committee’s evaluation of the executive officer’s individual performance and contributions to financial and strategic objectives;
•
Labor market conditions, the need to retain and motivate the executive officer and the executive officer’s potential to assume increased responsibilities (which may be part of the Company’s leadership succession plans) and contribute long-term value to the Company;
•
Operational management, such as project milestones, process improvements and expense management;
•
Internal working and reporting relationships and partnership and teamwork among our executive officers (for example, using the same ACIP financial metrics and objectives for all executive officers promotes teamwork and collaboration and our executive officer’s contribution to company-wide initiatives, such as our commitment to reduce operating expenses);

48qualcommlogoa04.jpg2017 Proxy Statement

Compensation Discussion & Analysis

•
Individual expertise, skills, knowledge and tenure in position;
•
Leadership actions that communicate, promote and support compliance with our Code of Ethics and our Code of Business Conduct (such as discussing ethics at meetings our executive officers have with employees, participating in an internal video series on compliance and establishing a review board to oversee internal investigations); and
•
Developing and motivating employees (such as establishing processes for identifying and assessing high potential employees) and attracting and retaining employees (such as initiatives to increase the pipeline of women in leadership roles).
The Compensation Committee reviews the compensation practices of other companies with which we compete.
The Compensation Committee identified peer companies to use for competitive analyses, taking into account recommendations made by Frederic W. Cook & Co., Inc. (FW Cook), the Compensation Committee’s independent compensation consultant. The peer companies were identified based on the following characteristics:
•
Technology, telecommunications and media companies (excluding those that are primarily content producers) based on Global Industry Classification Standard (GICS) codes;
•
Companies of comparable size, with both market capitalization and revenues between 0.25x to 4.0x Qualcomm’s market capitalization and revenues;
The Compensation Committee uses market capitalization as the primary quantitative criterion because:
◦
Market capitalization, a key component of which is stock price, is the key driver of equity compensation grant value, and equity compensation grant value is the single largest component of CEO compensation among technology companies with large market capitalizations;
◦
Market capitalization is directly related to stockholder benefit; and
◦
A significant portion of our business is technology licensing, which is a high-margin business, and as such, Qualcomm typically has higher market capitalization and profit than companies with similar revenues.
The Compensation Committee also includes revenues as a secondary quantitative criterion because revenues are commonly used as a selection criterion by our peer companies, third-party compensation survey providers and proxy advisory services. Net income, EBITDA and EBITDA margin are also reviewed by the Compensation Committee as reference points for comparison.
•
Comparable compensation models;
•
Consistent and on-going data availability; and
•
Peers of peers, which are the peer companies often disclosed by our peer companies.
Figure 13 identifies the peer companies that the Compensation Committee selected in May 2016. The peer companies and Qualcomm are ranked, high-to-low, on revenues, net income, EBITDA, EBITDA margin and market capitalization. Compared to the prior year’s peer group, the Compensation Committee replaced Honeywell, Lockheed Martin and United Technologies with HP Enterprise, Netflix and VMware because the latter set of companies are technology companies that fit the selection criteria and have greater business and labor market overlap with Qualcomm than the former set of companies. In addition, DirecTV was removed due its completed acquisition in 2015.
Qualcomm’s percentile rankings among the peer companies illustrate that, relative to our peer companies, we approximated the median for revenues and market capitalization and were between the median and 60th percentile for the other metrics.

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Compensation Discussion & Analysis

Figure 13: Qualcomm’s Relative Rankings Among Peer Companies as of March 31, 2016 (1)
Revenue
 
Net Income
 
EBITDA
 
EBITDA Margin
 
Market Cap
Company
Ticker
$ Millions
 
Ticker
$ Millions

 
Ticker
$ Millions
 
Ticker
 
 
Ticker
$ Millions
Amazon.com
AMZN
107,006

 
GOOG
16,348

 
MSFT
30,463

 
V
67%
 
GOOG
518,917

Microsoft
MSFT
88,084

 
IBM
13,190

 
CMCSA
24,876

 
FB
46%
 
MSFT
436,831

IBM
IBM
81,741

 
INTC
11,420

 
GOOG
24,423

 
AVGO
42%
 
FB
334,694

Alphabet
GOOG
74,989

 
MSFT
11,408

 
INTC
23,067

 
INTC
42%
 
AMZN
279,511

Comcast
CMCSA
74,510

 
CSCO
10,333

 
IBM
20,082

 
TXN
41%
 
V
183,663

Intel
INTC
55,355

 
ORCL
8,844

 
ORCL
14,908

 
ORCL
40%
 
ORCL
169,771

HP Enterprise
HPE
51,778

 
CMCSA
8,163

 
CSCO
14,283

 
MSFT
35%
 
INTC
152,821

Cisco
CSCO
49,589

 
V
6,700

 
V
9,479

 
EBAY
34%
 
CMCSA
149,182

Oracle
ORCL
37,159

 
QCOM
4,797

 
FB
8,239

 
QCOM
34%
 
IBM
145,525

EMC
EMC
24,704

 
FB
3,688

 
QCOM
8,029

 
CMCSA
33%
 
CSCO
143,264

Qualcomm
QCOM
23,957

 
TXN
2,986

 
AMZN
7,879

 
TWC
33%
 
QCOM
76,449

Time Warner Cable
TWC
23,697

 
HPE
2,181

 
TWC
7,777

 
GOOG
33%
 
AVGO
60,324

Facebook
FB
17,928

 
EMC
1,990

 
HPE
7,562

 
MU
31%
 
TWC
57,963

Visa
V
14,063

 
TWC
1,844

 
TXN
5,300

 
CSCO
29%
 
TXN
57,722

Micron Technology
MU
13,737

 
EBAY
1,725

 
EMC
4,855

 
VMW
27%
 
EMC
51,889

Texas Instruments
TXN
13,000

 
ADP
1,504

 
MU
4,194

 
IBM
25%
 
NFLX
43,763

ADP
ADP
11,240

 
AVGO
1,390

 
AVGO
2,950

 
ADP
21%
 
ADP
41,038

eBay
EBAY
8,592

 
MU
1,071

 
EBAY
2,946

 
EMC
20%
 
HPE
30,435

Broadcom, Ltd.
AVGO
6,960

 
VMW
997

 
ADP
2,332

 
HPE
15%
 
EBAY
27,263

Netflix
NFLX
6,780

 
AMZN
596

 
VMW
1,776

 
AMZN
7%
 
VMW
22,158

VMware
VMW
6,647

 
NFLX
123

 
NFLX
368

 
NFLX
5%
 
MU
10,862

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
75th percentile
 
69,721

 
 
9,961

 
 
18,789

 
 
41%
 
 
180,190

50th percentile
 
24,201

 
 
2,584

 
 
7,828

 
 
33%
 
 
101,794

25th percentile
 
11,680

 
 
1,418

 
 
3,261

 
 
22%
 
 
41,719

QCOM percentile rank
 
49
%
 
 
60
%
 
 
55
%
 
 
59%
 
 
48
%
(1)
Data reflected in Figure 13 represents the latest four quarters of data available on March 31, 2016 reported in Standard & Poor’s Compustat reports as of March 31, 2016, the time at which FW Cook prepared the peer company selection analysis.
FW Cook provides analyses of peer company competitive practices. The Compensation Committee considers these peer company competitive practices, along with the other factors described in this section, when determining the salaries, ACIP targets, long-term equity grant date fair values and the TDC for our CEO and other executive officers.
The Compensation Committee considers the impact of compensation decisions made in prior years.
Fiscal 2014 Front-loaded Restricted Stock Units to Maintain Leadership Continuity/Impact on Equity Compensation in Subsequent Years
In fiscal 2014, the Board determined that strong defensive actions were necessary to retain our senior executive team in the intensely competitive mobile communications industry. Accordingly, in fiscal 2014, we granted front-loaded RSUs, which accelerated future years’ RSU grant values into fiscal 2014, to encourage retention without making above-market grants and increasing related costs and dilution over time. Since we attributed a portion of the front-loaded RSUs granted in fiscal 2014 to fiscal 2016, the Compensation Committee considered the annualized value of the fiscal 2014 RSU grants in determining fiscal 2016 total equity grant values (i.e., the Compensation Committee reduced the total equity value that it would have otherwise granted to the NEOs in fiscal 2016 by the amount of the RSUs granted in fiscal 2014 that was attributable to fiscal

50qualcommlogoa04.jpg2017 Proxy Statement

Compensation Discussion & Analysis

2016). There will be similar annual offsets for Messrs. Mollenkopf and Aberle and Dr. Jacobs through fiscal 2018 as their RSUs were front-loaded for five years. The RSUs granted to Mr. Davis were front-loaded for three years, and consequently, he had annual offsets through 2016. Mr. Modoff, who was hired in fiscal 2016, did not receive a front-loaded RSU. Figure 14 summarizes the grant date fair values and annualized values for these front-loaded RSUs.
Only performance-based equity during period covered by front-loaded RSUs
The Compensation Committee also committed that it would grant only performance-based equity to our executive officers during the period covered by the fiscal 2014 front-loaded RSUs. Mr. Modoff is excluded from this commitment because he did not receive front-loaded RSUs.
Figure 14: Fiscal 2014 Front-Loaded RSU Awards
Name
Grant Date Fair Value
($ millions)
Covered Periods
Annualized Grant Date Fair Value
Vesting
Steve Mollenkopf
30.0
Fiscal 2014 - 2018
$6.0 million annually for five years
Five equal annual installments
George S. Davis
6.9
Fiscal 2014 - 2016

$2.3 million annually for three years
Five equal annual installments
Derek K. Aberle
16.1
Fiscal 2014 - 2018
$3.2 million annually for five years
Five equal annual installments
Paul E. Jacobs
45.0
Fiscal 2014 - 2018
$9.0 million annually for five years
Three equal installments on the 3rd, 4th and 5th anniversaries of the grant date
We engage independent advisors.
The Compensation Committee has the authority to engage and terminate any independent compensation consultant and to obtain advice and assistance from external legal, accounting and other advisors. As previously described, the Compensation Committee engaged FW Cook, an independent executive compensation consulting firm, to advise it on compensation matters during fiscal 2016. FW Cook reports directly to the Compensation Committee. The Company did not engage FW Cook for any additional services during fiscal 2016 beyond its support of the Compensation Committee, and the engagement did not raise any conflicts of interest. Pursuant to the engagement, FW Cook:
•
Provided information, insights and advice regarding compensation philosophy, objectives and strategy;
•
Recommended peer group selection criteria and identified and recommended potential peer companies;
•
Provided analyses of competitive compensation practices for executive officers and nonemployee directors;
•
Provided analyses of potential risks arising from executive and non-executive compensation programs;
•
Provided analyses of aggregate equity compensation spending and related dilution;
•
Reviewed and commented on recommendations regarding NEO compensation amounts;
•
Advised the Compensation Committee on specific issues as they arose, including engagement with stockholders; and
•
Kept the Compensation Committee informed of executive compensation trends and regulatory and governance considerations related to executive compensation.
The Compensation Committee also sought and received advice from our outside legal counsel, DLA Piper LLP. Our human resources department supported the Compensation Committee in its work, collaborated with FW Cook and DLA Piper, conducted additional analyses and managed our compensation and benefit programs.

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