NEW YORK (BLOOMBERG, REUTERS) - Broadcom chief executive officer Tan Hock Eng received US$103.2 million in reported compensation last year, his biggest-ever pay package, as the computer-chip maker prepares to make the largest acquisition in the history of technology.
Tan's stock grant, valued at US$98.3 million, will vest in 2020 and 2021 at its target value if the San Jose, California-based company's shares outperform at least half of the companies in the S&P 500 during the performance periods, according to a regulatory filing on Tuesday (Feb 20). If the firm's stock return exceeds 90 per cent of members of the index ending in 2021, and the return is positive, Penang-born Tan can receive a maximum of 4.5 times as many shares.
The CEO also got US$1.1 million in salary and a US$3.71 million bonus. The company said it doesn't intend on granting him any additional equity that can be earned before 2021.
It's the largest pay package Tan has received in a single year. Broadcom is rewarding him for what he's done and what he might pull off - his US$121 billion hostile bid for Qualcomm, the maker of chips that power smartphones. Before this, his largest compensation package was the US$31.9 million he got for 2013 at a Broadcom predecessor company, Avago Technologies Ltd.
Investors like Tan's track record. Broadcom's share price has climbed steadily from less than US$20 in 2009 when it went public to its current US$249.62. That's helped him reap more the US$194.6 million from vested shares and option exercises over the past five years, according to data compiled by Bloomberg.
The MBA degree holder from Harvard University, worked with Quek Leng Chan as managing director of Hume Industries in Malaysia from 1983 to 1988 before helming a venture capital fund in Singapore from 1988 to 1992.
With Broadcom, Tan has built one of the world's largest chipmakers through a string of acquisitions, slashed costs to boost profitability and is three weeks away from one more coup. On March 6, Qualcomm shareholders will vote on whether to elect Broadcom-nominated directors and overturn the opposition of that company's board and management to the takeover offer.
Qualcomm on Tuesday unveiled a sweetened US$44 billion agreement to acquire NXP Semiconductors NV, its most defiant move in its defense against the hostile bid from Broadcom. The new deal puts pressure on Broadcom to decide if it will stick with a stipulation in its bid that Qualcomm does not raise its offer for NXP. It could also strengthen Qualcomm's defenses because it allows its shareholders to better assess the standalone value of Qualcomm as an alternative to a deal with Broadcom.
Qualcomm shares fell 1.3 per cent to US$63.99, significantly below Broadcom's latest US$82 per share cash-and-stock offer unveiled on Feb 5, as investors saw the new NXP deal as increasing the chances of Qualcomm repelling Broadcom.
Broadcom said on Tuesday it was evaluating its options in response to Qualcomm's move and noted that the revised price for NXP was well beyond what Qualcomm has repeatedly characterized as "full and fair." It called the new deal a transfer of value from Qualcomm shareholders to NXP shareholders.