InterDigital Inc (IDCC)

[rmarchma]

Proposed email to Harry with copy to each director. Any suggestions or input to the following proposed email that I intend to send next week will be appreciated:

Dear Mr. Campagna,

As you already know, I am a long-term investor in IDCC. I still believe in the potential and possibilities of InterDigital. However, I am concerned by the recent rash of discretionary insider selling at IDCC. The psychological impacts that all of these ongoing individual SEC form 4s are having upon the stock, and upon the possible perceptions/appearances of insiders' lack of faith in IDCC’s ability to properly execute, is unnerving to say the least. With almost every officer discretionally selling stock as the critical events rapidly approach, is definitely sending a bad signal to the investment community. Already we did not get the type of decision and updated contract that many of us had hoped for in the Samsung arbitration.

I have a question that I hope someone at IDCC will answer as follows:

How does IDCC explain the recent discretionary insider selling beginning in the middle of November to the new institutional investors who were encouraged to invest by the “roadshow” investor presentations, which were occurring at the same time? Doesn’t this appear totally contradictory to have roadshow presentations and discretionary insider selling occurring at the same time? Does IDCC have any plans to help minimize the negative impact of the SEC form 4 insider sales filings, which produce investment “alerts” on each sale in most investment software packages?

My main point is that IDCC's insiders need to be more aware and cognizant of the possible negative impact of these insider sales to the investment community. I thought IDCC did a very good job and took a proactive stance with the press release in October, when the vesting of restricted stock gave rise to significant insider sales due to tax-related reasons. You even stated that this particular selling in October was a part of the 10b5-1 planned sales. I commended Guy Hicks on that press release and how the situation was handled.

It appears that IDCC insiders definitely consider stock options as part of their compensation, and will exercise stock options, and will continue to sell stock each year. Therefore, what I would like to suggest is for IDCC to establish a 10b5-1 planned sale for each year, and eliminate discretionary insider selling. The only exceptions to the discretionary insider selling policy should be for a very limited number of clearly defined situations, such as for an unexpected hardship in an insider’s personal financial situation.

Unless one of the specific exceptions occur, allow the insiders to sell only once a year at a planned specific time, such as a few specified days in December, through a 10b5-1 planned sale. If it is part of a 10b5-1 planned sale, then insiders are allowed to sale no matter if you have material undisclosed information or not. A press release could accompany this once-a-year planned 10b5-1 sale to help explain the insider selling to the investment community. If insider selling is part of a planned sale, then much of the negative implications are greatly minimized.

Some of the benefits of using 10b5-1 Trading Plans are as follows:

· “Boosting employee morale by providing a measure of liquidity with respect to stock compensation;

· Reducing the risk that employees may violate the insider trading laws;


· Minimizing the possibility of adverse publicity resulting from transactions in company securities by executives that are not pursuant to Trading Plans; and

· Reducing the risk of shareholder lawsuits, which frequently rely on unusual sales by senior executives to demonstrate… claims of market manipulation.”


The above and more information about 10b5-1 Trading Plans from the following link:

http://www.mintz.com/newspubs/Bus-Fin&Sec/10b5-1tradingplans.pdf

I hope that you will consider my suggestion on insider selling, or either come up with some other way to minimize the negative impact of insider selling. If you would clearly demonstrate your willingness to help rectify shareholders’ concerns, then I think that the shareholders will be much more supportive of the top management at IDCC.

Sincerely,
Ronny Marchman