More Details on Spinning Off Palm's OS Subsidiary
In a recent SEC filing, Palm Inc. has released more details its plans to spin off the Palm Solutions Group, its OS and software division, into a subsidiary.
Palm plans to have this process completed no later than the end of this year. Also, it might be totally separated from Palm Inc. This process would include "a legal separation, third party investments by strategic partners, sub-IPO and spin-off".
This move is intended to deal with the problem of Palm Inc. both cooperating with its licensees and competing against them. Palm needs to work closely with the OS licensees, like Sony and Handspring, to improve the Palm OS but it also competes against them in hardware sales. Splitting off the portion of the company that develops the OS could greatly relieve some of the tension.
Incedentally, the SEC filing mentions the code name for the first ARM-based Palm: Hercules 1.0.
This SEC filing takes the form of the job offer that Palm made to David Nagel, who was hired to oversee the spin-off process and to be the CEO, President, and a director of the new company, if one is formed.
Palm must have really wanted to Mr. Nagel to leave his job at AT&T because his compensation package is a sweet deal. In addition to his $620 thousand salary he got a $200 thousand hiring bonus and can participate in a discretionary cash bonus plan giving him up to 70% of his base salary. This will be dependent on "various factors, including company and individual performance." It should be noted that no Palm executive has received any bonuses so far this year due to the company's current situation.
He is also eligible to get a great deal of Palm stock. One stock grant is an incentive to get the next generation of handhelds out the door. He gets 50 thousand Palm shares in two years or when the first ARM-based Palm handheld hits the market. The second set appears to be aimed at keeping him at Palm. He gets 50 thousand shares a year for the next two years if he still works there. He will also be able to buy up to 6.5% of the shares of the new company.
As AT&T's chief technology officer, Mr. Nagel led its technology strategy and R&D planning. As president of AT&T Labs, he was responsible for managing R&D for the company's next-generation Internet Protocol, data and managed services, and AT&T Business Services IT systems. Mr. Nagel also served as the chief technology officer for Concert, the global joint venture between AT&T and British Telecom.
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