Olddog re RSU grant date and Harry's compensation you said:
..."H. Campagna, as COB, was granted 50,000 RSUs. In addition, it appears he may have been vested for 16,000 options, and received $15,000 compensation.. The exact date when the RSUs were granted is not known, but according to info in the proxy statement it would have been between Jan 1, 03 and Apr 7, 03. I believe, RSU’s are valued based on the market price when they are granted. During this period IDCC’s stock ranged between a low of $11.50 and a high of $24.14, so the value of the RSU’s would be between $575,000 and $1,207,000. I would say during most of the period a good average price would be around $14.00, which would give a RSU value of $700,000."
I was looking through some SEC filings from a link furnished by Corp_Buyer and noticed an F4 filing with a transaction date of Jan. 30, 2003 for the granting of the 50,000 RSUs to Harry in 2003, (for services as board chairman in 2002). You are correct in that RSUs are valued at the date of grant. The closing price of IDCC on Jan. 30, 2003 was $12.18. Therefore the market value of the RSU grant on Jan. 30, 2003 = 50,000 x $12.18 per share = $609,000.
I estimate the value of Harry's additional compensation as outside director for 2002 services to be $151,160 (16,000 vested stock options per year x the Black-Scholes valuation of $8.51 per option for 2002 = $136,160 + $15,000 cash stipend). Therefore Mr. Campagna's compensation received in 2003 for 2002 services appears to be $760,160. This is not as much as I initially thought it could be, but still more than the highest paid IDCC employee Mr. Goldberg, whose total compensation for 2002 was $665,625.
I noticed another F4 for Harry for a grant of 20,000 RSUs with a transaction date of Jan. 21, 2004. This could be all or part of Harry's compensation received in 2004 for services as board chairman in 2003. The closing price of IDCC stock on Jan. 21, 2004 was $25.30 per share x 20,000 = $506,000. I say this might be all or part of his compensation as chairman, because Mr. Campagna might have received some stock options as board chairman in addition to the RSUs.
Sometimes option grants do not have to be reported on an F4, only option exercises, unless option grants are part of an insiders’ initial stock position. The new directors received both RSUs and stock options as compensation. We'll know if Harry received stock options in addition to RSUs for services as board chairman when the 2004 proxy comes out. If he only received the 20,000 RSUs as compensation for board chairman, then at least his compensation is being lowered somewhat from the previous year.
I also looked over the December 2003 F4s for the three new outside directors: Shaner, Zabarsky, and Kamins. They each received 6,000 RSUs and 2,000 stock options with an exercise price of about $19.60, the closing stock price on the date of grant in December 2003. Therefore, each new outside director received compensation of $117,600 each for the RSUs (6,000 x $19.60 stock price on date of grant) and $31,980 each for the stock option grants (2,000 x Black-Scholes valuation of $15.99 per option for grants in 2003) for a total estimated compensation of approximately $150,000 each. I’m not sure if this represents a special arrangement for the new directors, or if it represents a new compensation methodology for all outside directors, instead of the 16,000 vested stock options per year. Once again we will know more when the proxy comes out.
I suppose that the fair market value at date of grant for RSUs, and the Black-Scholes method for stock options are ways to measure compensation for stock-based instruments received. However the ultimate and perhaps truer measure for stock-based compensation is how much one sells the underlying stock for and the amount of money actually pocketed. Also looking back over the F4s, Harry had two large sales of IDCC stock in 2003.
Mr. Campagna exercised a total of 100,000 stock options on three dates on April 1, 3, and 4, 2003 at an exercise strike price of $5.4375 per share for a total cost of $543,750. He sold all the 100,000 shares of stock acquired through options receiving cash proceeds of $1,965,235 for an indicated gain of $1,421,485, before broker commissions. Harry also sold a total of 80,000 of his restricted stock shares on June 4 and 5, 2003 receiving total cash proceeds of $2,138,280, which would all be gain since there is no cost for restricted stock. BTW the June sale was a preplanned sale using the 10b5-1 rule.
Mr. Campagna also sold 40,000 shares in June 2002 for approximately $450,000. This was reported in Yahoo’s IDCC insider information, but I can’t find an F4 for this particular transaction. I don’t think that F4 filings were required by the SEC until the autumn of 2002. I suspect that this sale was from restricted stock and prearranged using the 10b5-1 rule.
It appears that Harry’s restricted stock vests on the date of the ASM in June, and that he is using preplanned sales on that date. If this observation is correct and continues, then we can probably expect another sale of restricted shares using the 10b5-1 rule at the ASM meeting date in June 2004. BTW predetermined 10b5-1 plans are the best way for insiders to sell shares, causing the least detrimental impact to the outside shareholders.
I think that Harry also made a large sale of IDCC stock in January 2000. However, I don’t know for sure since there was no F4 required filing then and Yahoo insider sales information does not go back that far. If memory serves me correctly, I believe Harry sold around 50,000 shares of IDCC in early January 2000 at the height of the price bubble for nearly $80 per share or almost $4 million total. If someone knows for sure, please correct me if I am wrong re this sale. I don’t recall him making stock sales prior to 2000, but I also could be wrong about that too.
Mr. Campagna has received a total of 585,000 stock options and 305,000 RSUs for his services as Chairman of the Board over the years through April 7, 2003 according to the proxies. I estimate that he has also received perhaps another 233,725 options and warrants for other services as an outside director. This estimate is based on the 2001 proxy total of 770,725 exercisable options/warrants beneficially owned by Mr.Campagna + 48,000 option grant upon reelection as an outside director in 2002 less the 585,000 options received as services as board chairman = 233,725 additional. The 2001 proxy total appears to be the maximum amount of his stock option ownership.
I don’t mind people being fairly compensated, or even paid very well if deserving. I do have a problem when the compensation appears excessive. As you noted it is very unusual for a independent outside Chairman of the Board to be the most highly compensated individual of a corporation, unless he is also CEO or a defacto inside officer. I hope that perhaps Mr. Campagna might possibly justify his unusual compensation to the outside shareholders at the next ASM, and also his continued chairmanship of the Compensation Committee, if he is a defacto insider.
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