mschere, Management under compensation... GRRRRRRRRRRR
You said
If they deliver Nokia, Samsung ,and Ericsson.. will generate in ONE FISCAL QUARTER a sum greater that all previous managements. ..and will have been GROSSLY under compensated..
Not to pick on you, mschere, because your view is very widely held, as shown by the responses you've already received. Your post just hit my pet peeve. Your view is the very reason why management compensation has spiraled to obscene levels. It’s the attitude that if my investment performs exceptionally well, then I DON’T CARE HOW MUCH MANAGEMENT GOT because I am happy with my investment. There is no analysis of cost/benefit, no threshold crossed from generous pay for a job well done to blatantly skimming off the top.
I challenge anyone to compute the total compensation that would be received by our management at what ever stock price you pick and justify how they are under compensated. When I look at the numbers I can’t imagine what great work they could do that justifies the tens of millions that they all would get if IDCC price goes up significantly. How much of it is due to their great work versus the rank and file employees who created the patents. I fully support ESPPs for the workers as well as reasonable and proportional options for management. I feel the management side has gotten way out of whack, and not just at IDCC, but throughout big business.
I do not begrudge management a fair and reasonable salary. If they are successful, they should be generously compensated. But it should be reasonable and there needs to be some benchmarks. If they were taking below market salaries and they received out of the money options, then great success leading to excessive compensation would not bother me because they took a risk and bet on the company’s future. If the company did not succeed they would get less than they could have otherwise, moderate success would bring them to parity, while great success brings great reward. This is how I feel options should be used. However, it has evolved into a system of management getting fully compensated with generous salaries, receiving options in numbers that cause material dilution, and priced at the current market price. This means if the company performs poorly, they still have a nice pay check for failure, if the company muddles along with the market and they sell their options whenever they go up a certain %, they get a great payout for mediocre performance, cashing in on normal market volatility. If the company is very successful, they hit the lottery without the 20 year payout and they get to use the capital gains rates for taxes.
If the management team has unique and irreplaceable capabilities then there could be justification. But this is going on throughout the corporate world – not everyone is in the top 5%, yet they all get paid as though they had invented the assembly line. As long as most hold the view (if I do well, I have no interest in examining what management gets), it will continue. I find it ironic that it is only when a company does poorly do stockholders look at management compensation, and it is at that point that it is the least out of line. (Of course, when it happens management tends to want to reprice the out of the money options to current levels.)
Regardless of what happens and how much management gets, I will not stew about it as I cannot do anything about it. However, I felt compelled to respond because if enough people begin to look at it from a perspective of fairness and reasonableness, then maybe there will be a level of awareness that will slow, stop or even begin to reverse what I see as huge disconnect between performance and compensation. But if we meet at the Houston 100 and you ask me what I think of management compensation, I will tell you I’m being raped, but at $100 a share (which would be $110 a share without excessive management comp) I can afford a large supply of Vaseline.
