InterDigital Inc (IDCC)

[Corp_Buyer]

Danny your "outdated" pretext does not ring true since these entities have all complained about compensation excess, self serving management decisions, or serious corporate governance issues both repeatedly and recently:

Shareholders voted overwhelmingly AGAINST management's positions on governance related issues for the past three years in a ROW (2003, 4, and 5), both during and before the "WM era" (an apparent reference by you of the fact that WM is #2 in command).

As for Tom Carpenter, during the "WM era", as recently as this month, he sharply criticised management's compensation excesses and lack of shareholder alignment as follows: "We believe the $150 million would have been better spent paying a $2.50 to $3.00 special dividend to shareholders. ..In our view, IDCC’s share repurchases have benefited shareholders little, instead recouping ground lost through generous past option grants." You can't get any more current than this month.

BTW, HC is #1 and he is really running the company. Regarding his qualifications, conflicts of interest, and compensation excesses, TC wrote in Sept. 2003 that "InterDigital’s current Chairman is a garment industry entrepreneur and does not appear to us to have a substantial day-to-day role with the company. Yet, the individual has a combined one million shares and options. This is more than double the number of the President of IDCC, more than five times the number of the Chief Financial Officer, and approximately four times the number of IDCC’s head of licensing. Also, he has sold three times the number of shares in 2003 as any other officer or board member of InterDigital. While the Chairman has been at IDCC a long time, he is also one of the two members of the compensation committee. We believe InterDigital would be better served by having a wireless industry veteran in the Chairperson role.
Someone that brings a wealth of OEMs relationships to the position and could travel and meet with OEMs to enhance IDCC’s profile in the industry could add immense value to InterDigital, in our opinion. Quite possibly, the person could also help IDCC unlock the value of its strong
patent portfolio, which could translate into a much higher share price." - As you know, HC is still #1 at the company and TC's comments are even MORE applicable today than when they were made.

ISS analyzed the "compensation system" at IDCC in depth in connection with the latest shareholder vote on management's request to shareholders for additional compensation (5M more ISO shares in 2003) and concluded the "compensation system" at IDCC is "excessive". That was BEFORE the LTCP plan was piled on by management without shareholder approval in 2004 and management's decision to accelerate vesting of all the ISO shares in 2005. Since the compensation was excessive before the LTCP plan piled on, and knowing the cost of the LTCP plan, it follows that the compensation system is even MORE excessive today. ISS's conclusion in 2003 was easily predicted and the same math would give us the same result today, but excessive by even greater margin. What math? Here it is again in case you forgot:

http://www.investorshub.com/boards/read_msg.asp?message_id=1059477

Furthermore, during the WM era, ISS deemed that HC is an "affiliated outside director" recently at the time of HC's latest reelection, just last year. According to ISS, HC does not qualify as a fully independent outside director, yet he is still triple Chm of the company, Compensation Committee and the Nomination Committee, each a very sensistive position that deseves only the most qualified (see Tom Carpenter's review of HC above) and independent individual. As you must know, ISS recommended a vote of “withhold” on the CoB in connection with his most recent reelection.

As for our largest institutional investor, the Heartland Fund, just last year they stated: "As long-term holders of IDCC, since 1993 we have been patiently awaiting the fruits of the company’s Intellectual Property (2G and 3G technologies). Rather than a steady stream of increasing royalties, since 2002 we have seen a steady stream of arbitrations and litigations from IDCC’s best customers. In the meantime, Officers, Directors, and especially our Chairman have enriched themselves with generous option grants and numerous insider sales. For these reasons, we withhold our votes for all these Directors and vote to declassify the Board of Directors. Hopefully, the latter will make Directors more accountable to public shareowners."

See also:
http://www.investorshub.com/boards/read_msg.asp?message_id=9814077

MO,
Corp_Buyer