Revlis this will be my only post to you on the subject matter regarding your debate as to why the employees and management deserved to dilute the company even after they became financially secure.
Back in 12/97, I would have agreed with you due to the fact that IDCC had from memory, $25 million in the bank with almost no prospect of additional licenses. In early 98, again from memory, the German patent office upheld our patents. Shortly after that in 98 there was a flurry of new licenses which basically insured our future cash flows for the foreseeable future. In 99 Nokia signed, further enhancing our cash position and cash flows. From 12/97 our cash flow continued to increase all the while we were increasing investments in new people and technology.
During the mid 90's after the Motorola debacle, when IDCC theoretically should have been giving out more options and less in cash, which they did to a point although, back then it wasn't acceptable for companies on Wall Street to grant obscene stock and option grants plus obscene salaries. IDCC was just like most other companies. Management during the lean years did take smaller cash compensation and did take options to offset the lower salaries that they were taking in order to help the company survive.
In the late 90's it became common for public companies to grant obscene option grants because Wall Street was under the misguided impression these were free to companies. IDCC just like every other company went on an option granting spree in the late 90's and early this decade diluting our ownership drastically. This orgy has cost IDCC investors hundreds of millions in buy backs to get our outstanding stock down somewhat due to the dilution that occurred mostly AFTER IDCC became flush with cash. While they were granting obscene option grants to themselves, they also increased the cash component of their compensation to more reasonable AND GENEROUS levels. I would not deny employees large grants if they gave up salaries in exchange. Unfortunately, the years you are defending, management gave up nothing and in fact increased their cash salaries from their low point in 97 to much more generous levels.
Start up companies have no choice but to issue large option and stock grants in exchange for paying large cash salaries in order to conserve cash. IDCC stopped being in that position after the German Patent Office ruling. Their cash flows kept increasing at a very nice pace. At no point after 12/97 did they give up cash in lieu of option grants. Quite the contrary, they took both when it became ok to pay obscene levels of total compensation. One thing you have to remember is the fact that this company is a very small company in relation to most on Wall Street. There are only 300 employees and the levels of compensation are very, very generous when counting cash compensation only, forgetting about option and stock grants for companies of its size.
You can continue debating the subject and show how little you really know about compensation and the true cost to shareholders. IDCC as not alone in the fleecing of investors. Wall Street is to blame for this IMO. They pushed companies to issue stock and option grants in the misguided theory that it would align the long term interests of investors with employees. It did not work and hopefully it changes in the future not only for IDCC but for all of Wall Street. If companies continue diluting the ownership of investors, future returns will suffer dearly.
I hope you read this post with an open mind and really think about it before responding. You can continue to argue and support management but this is not a unique situation with IDCC. The only difference is that IDCC accounts for significant portions of most members portfolios and that causes us to complain in a public forum about the excesses and abuses. Just because everyone else is doing it (paying obscene salaries and stock grants) doesn't make it right. Hopefully investors start to stand up to management at public companies and start demanding that they do their jobs for reasonable pay and not obscene pay hidden behind stock and option grants.
AI
