InterDigital Inc (IDCC)

[rmarchma]

Olddog re appearances of conflicts of interest

The point of my contentions is that there is an appearance of conflict of interest on IDCC’s Compensation Committee. I have never said that there was an actual conflict of interest, only that it appears that there could be a conflict. It just does not appear right for Harry to be chairman of the Compensation Committee, if he is one of the most highly compensated individuals at IDCC.

Who determines Harry’s compensation? Is it the compensation committee composed of himself and Mr. Roath, or is it just Mr. Roath, or is it the other outside directors, which would have been only Mr. Colson and Mr.Clontz for several years? Even if the other outside directors might determine Harry’s compensation and not he himself, he still determines the compensation of the outside directors. From just an appearance standpoint, it would be far better if a highly compensated Chairman of the Board had nothing to do with determining compensation for others at all.

Secondly let’s go back to an excerpt from the 2001 proxy as follows:

...“In connection with his service and extra commitment of time as Chairman of the Board during 2000, Mr. Campagna was awarded 40,000 restricted stock units under the Company's 1999 Restricted Stock Plan (RSUs) in 2000 and 100,000 RSUs in 2001. In connection with his service on the Board during 2000, Mr. Roath was awarded 10,000 options to purchase Common Stock in 2000 under the Company's 1997 Stock Option Plan for Outside Directors and 20,000 RSUs in 2001. During 2000 each of the Outside Directors was awarded RSUs in exchange for the relinquishment of a tax gross-up feature associated with previously granted restricted stock. The number of such RSUs were as follows: Mr. Campagna, 40,000; Mr. Colson, 12,000; Mr. Clontz, 12,000; and Mr. Roath, 12,000. The RSUs do not carry voting rights."

Mr. Roath has served on the Compensation Committee with Mr. Campagna since becoming a director in 1997. The above bolded sentence represents compensation received by Mr. Roath, in addition to his regular compensation as outside director and in addition to the restricted shares granted to him and all other officers and directors in 1999. What type of additional service did Mr. Roath do to deserve this extra grant of 10,000 options and 20,000 RSUs, and who determined it? If it was the compensation committee, of which Mr. Roath was a two-person member, then once again there appears to be conflict of interest.