Qualcomm Settles Stock Option Lawsuit

Qualcomm has settled a lawsuit with former employees whose division was sold to Ericsson. The employees contended that the terms of the sale failed to provide them with all the benefits their option plan had promised. The settlement will provide 840 employees with $11 million.

The employees had sued Qualcomm in 1999. They contended that their options should have been fully vested on sale; instead, the agreement provided that employees could get a cash bonus equal to a portion of the unvested portion of their options, to be paid if employees stayed two years with Ericsson. They would also be eligible for Ericsson options. Qualcomms plan was ambiguous on whether the options should have been vested. It fully vested options on a change of control of the company, but did not specify what would happen if a division were sold. After the sale, Qualcomm stock increased from $25 to $175 by the end of the year; Ericsson went from $31 to $66. Employees claimed that if their options in Qualcomm had fully vested, they would have owned shares that would have been much more valuable.