InterDigital Inc (IDCC)

[rmarchma]

Emails to IDCC's Board of Directors

The following two emails were sent to Mr. Campagna and the other members of the Board on Jan. 22 and Jan. 21. There have been no replies to either of these emails from IDCC as yet. The first email is from the large individual shareholder who tried to organize the failed meeting in October, and the second email is from me. Both of these emails were follow-up correspondences, which elaborate and expound upon issues that were first addressed to the Board of Directors in October.


Dear Mr. Campagna:

I wrote to you on October 7th regarding matters of our company, InterDigital, principally concerning corporate disclosure and communication as well as issues within the umbrella of corporate governance. I was sorry to have not received some form of personal response to that correspondence but will attempt again today to open some type of constructive dialogue between senior management and the common shareholder.

Again, I have been an owner of InterDigital since 1997 and I have invested more money and comfortably own more common shares than the collective total of the independent members of our Board, based upon the latest disclosure of such from the proxy statement of 4/29/02. I am very aware that another interested, caring and very informed shareholder, Ronny Marchman, has corresponded with you and other Board Members in the last couple of days where he has raised legitimate and constructive concerns about executive and Board compensation, common stock option grants and insider selling at the highest ranks of our company. It is these issues to which I will hold my comments today.

In the effort to establish a proper tone, the following comments are only provided with a constructive purpose---all shareholders, whether related or unrelated to the company, are partners; we should all have a common goal of doing and hoping for what is best for the company and its future; independent shareholders should never be treated or thought of as adversaries by our respective Board and Management, obviously, but as the partners in ownership and respected as such via all actions by the Board and Management.

In the last few years - principally 2000 and 2001, I believe - shareholders provided the Board the ability to issue an extravagant amount of common stock options. (I was certainly a shareholder during the time frame of these approvals but was also certainly inattentive to these particular issues and my individual duties as a shareholder.) In January 2002, the company had outstanding warrants and options representing 12 million common shares which to issue; this represents a possible dilution in excess of 22% to the outstanding shares-- no objective person can deny that this fact is offensive and shameful. This potential option cost to shareholders is enormous, even if, in the hypothetical, the company's performance had warranted high praise.

For the calendar fiscal year ending 12/31/01, excluding Mr. Fagan and Mr. Goldberg, the top four officers of our company had an average cash compensation of approximately $376,000, including respective bonus but excluding the value of granted stock options; Mr. Goldberg's compensation was approximately $717,000, excluding option values. When including the value of the respective stock options, InterDigital had four officers who obtained comfortably over $ one million of total compensation. This pay scale is from a company which had slightly more than $50 million in revenues and a year-end 2001 market capitalization of approximately $500 million. Again, any objective observer may call this shameful, if not ridiculous.

In my correspondence of last October 7th, I made specific reference to the options and warrant grants to the four "outside" directors, where such grants represented 6.7 times the collective common stock owned. When utilizing the Black-Scholes pricing for the value of option grants provided in fiscal 2001, the total average compensation to the "outside" directors was in excess of $350,000. This is comfortably more than 200% of the average broad compensation for the 200 largest American companies. Again, this is more than unfortunate; it is absurd.

In regards to the consistent and numerous occurrences of insider selling since November, Ronny Marchman has provided a summary with specific data. While this activity may be entirely coincidental in its occurrence just prior to the disappointing Samsung decision and the delay of the commencement of the Ericsson trial, I do know for a fact that in a number of cases this selling by so may of our senior executives has given the company a very negative prospective from the Wall Street Community. At a minimum, this selling has given the appearance of an 'immaturity' by our management. Certainly you, your fellow Board Members and Mr. Goldberg can instill methods which will result in a more disciplined behavior by our management and certain Board Member(s).

Many of my concerns expressed above have to do with the question of these stock options. To many sophisticated investors/owners, stock option plans tend to be nothing more than lottery tickets--that is they are unrelated to the individual Board Member's or employee's actual contribution to business' success or lack thereof. Excessive options violate the spirit of partnership investing--it is simply a one way street. I acknowledge, of course, that our shareholders approved the Board's request in recent history for these options, but I would predict that if the shareholders had the opportunity to vote again, the request would not be approved as presented. When a company has a shareholder base that is only 20% institutional, by definition that base is fragmented, sometimes inattentive and unsophisticated; the result is that respective boards and management can generally obtain shareholder approval without contention, where such may not be so easily accomplished with a more heavily weighted institutional ownership.

Do you and your fellow Board Members desire a greater institutional and money management investment in our company - which would indicate that the company's performance is successful, it's future is bright and that the Board's adherence to all proper fiduciary and governance matters is very sound - or do you prefer the ownership structure to remain as is such that you may be able to exist without accountability and may be able to implement whatever you desire, sometimes for selfish benefit? If the Board desires the former, certain tasks are not difficult and are within the Board's control - provide leadership and rigorously adhere to appropriate governance standards, reach out to the investment community, volunteering information on the operational and financial aspect of our company, aggressively compete for the investment dollars.

My expressed concerns - options, total compensation, insider selling - have nothing to do with stock prices; they have everything to do with proper corporate governance. To many, and understandably so, these concerns are exasperated when this kind of option granting, compensation and insider selling occur when the operating performance of the audited reports has been so mediocre at best over the same time periods. The market capitalization has held only due to anticipated and hopeful events yet to happen.

On October 7th I offered several suggestions to be considered by the Board; I would like to revisit those suggestions with some expansion. This is not 'rocket science' but simply good common sense and good moral principal:

Compensation Committee: as Mr. Roath has written so well "…those involved in corporate governance…must recognize their role is one of service rather than entitlement." You must admit that you are not an independent outside director - it is a well-known fact that you are the de facto CEO. As of the April '02 proxy, options, representing 10 times the common shares owned by you, had been awarded to you by the Committee which includes only you and Mr. Roath; as of that April date, your options represented 62% of all the options awarded to 'outside' directors. Many are aware of your terrific assistance to the company in the mid-90's but isn't that what Board Members should do if capable? There should not be some divine right for total control or excessive compensation - if that is the case, the company will ultimately fail or never reach its potential.

The NYSE and Nasdaz have proposals before the SEC that will require absolute independence regarding compensation committees as part of their respective exchange requirements. Why not recomposed this Committee with three truly outside directors?

Stock Options: A) Employees: Develop plans that incite ownership, instead of simply providing options, i.e. lottery tickets. Establish a plan whereby employees are able to borrow money from the company to purchase shares; if certain goals and objectives of the employee are met, the company could waive the loan, accommodate the interest burden or provide some combination of the two.

Within the current option plan grants, require managers to keep their shares - unless there was a true emergency. The result, of course, is that management will be aligned with the independent shareholder.

B) Directors: institute a prohibition of directors selling shares granted via options until such director leaves the Board, either voluntarily or otherwise. Again, this will create more alignment of directorship with shareholder. I do not understand how any legitimate director can oppose this prohibition. The Board must lead by example.

Secondly, the unbelievable generosity that you and Mr. Roath have provided to yourselves and others as directors should be revisited immediately. I have already commented on director compensation but the average annual grant of 32,000 options per year per director over a three-year term is shameful. Please provide a reference to this kind of compensation for directorship by comparable enterprises, much less the largest corporations in the U.S.

C) Although your Board has approval to distribute options and warrants representing approximately 12 million shares as of January '02, I would hope the Board will seriously consider reducing significantly the balance of those distributions. 22% dilution from options by a company with the profile of IDCC is more than unacceptable. Again, consider the enormous cost to the independent shareholder. (Of course, the independent shareholder does not know what the Board has done in this regard during fiscal year '02.)

Ultimately we should have a plan to buy back shares issued to insiders via options to avoid dilution ---but with the unrestrained governance that the Board has exercised regarding option grants, a buy back would absorb all of our cash within two years. It is recognized that the Board employed Pearl Meyers to provide justification to the above compensation but they work for you and simply hold no creditability.

The Conference Board's Commission on Public Trust and Private Enterprise issued a report this past September, much of which concerned the above issues. Leaders such as Peterson, Snow, Volcker, Bogle, Levitt are members of the Commission--perhaps the Board would do well to study this report--and their comments focussed on better aligning executive compensation with the long term company performance and shareholder interests, including among many items, forcing company officials to hold their shares; or alternatively review the thoughts and policies regarding stock options of Warren Buffett, our generation's leading investor/owner and the quintessential moral leader of corporate governance.

For additional reference, just today (1/22), Siebel Systems announced that Tom Siebel, Chairman and CEO, notified the company's board that he voluntarily canceled all stock options he has received since 1998, such options valued at $56.1 million under the Black-Scholes valuation model; this reduced Mr. Siebel's ownership to 10.7% from 13.5%. In the last two years he has received no cash compensation from the company and this option cancellation comes after the company was sued by the Teachers' Retirement System of Louisiana for excessive granting of options. The company's official statement reads: "Overall, the company believes executive compensation should be aligned with the company's results and general shareholder interests. Tom has taken a leadership position" in this regard. Judith Fischer, managing director of Executive Compensation Advisory Services notes that Mr. Siebel and other executives also gave up bonuses in early 2001 as a cost-cutting measure. Ms. Fischer expects other companies to reexamine respective executive compensation levels this year and some will abandon past practices of simply doling out generous raises and options. "Something is going to break the logjam and force boards to respond to realities." Siebel has a current market capitalization of $4.2 billion with estimated '02 revenues of $1.606 billion and estimated earnings of $121 million.

Board of Directors: why not expand the membership of our Board, bringing additions which represent leadership and intellectual capacity in the areas of technology, preferably wireless technology, and investment protocol. Both talents are undeniably needed and would be extremely beneficial to our company.

Lastly a comment and suggestion concerning Ericsson: if we are successful with this case where part of the result is a material payment of monetary damages, I would suggest that the Board i) provide a special dividend to the company's owners and/or ii) institute a buy back of corporate shares, both for good and obvious reasons. This could represent one of many steps necessary to indicate that the Board places it's fiduciary to the company owners as its' highest priority. If the common shareholder is in dispute with the management, the result is not healthy for anyone, including those who own or have rights to options. We are partners, should be 'joined at the hip' with common interests--let's act as such.

We recognize that the responsibilities of directorship are difficult and serious and again, I am hopeful that my comments above will be taken in a constructive, positive fashion by you and your fellow Directors. I am providing a copy of this correspondence to the other outside Directors, as well as to Mr. Goldberg and Mr. Bolgiano. As shareholders we are partners and let's hope that we all have the same objectives without serious conflict. Below is my address and phone number. Thank you.

Sincerely,




Dear Mr. Campagna,

I am a long-term investor in IDCC since the early 1990s. I still believe in the potential and possibilities of InterDigital, although that faith has been shaken somewhat lately. The recent flood of discretionary insider selling activity at IDCC beginning in the middle of November is another of my shareholder concerns.

Directors and top management officials of companies have a fiduciary responsibility to their shareholders, employees, and customers. Fiduciary responsibility means that insiders should deny their own self-interests for the interests of others to whom you have a fiduciary responsibility. Many in corporate management seem to have forgotten their fiduciary responsibilities to their shareholders. Outside shareholders’ interests should be placed before the self-interests of the insider shareholders, period. Unreasonable compensation, excessive stock options, and now significant discretionary insider selling all fit here.

In the following compensation recap, five numbers are given for each of the five highest paid IDCC executives based on the latest 2002 proxy: (a) current salary, (b) 2001 bonus, (c) number of 2001 options granted, (d) value of 2001 option grants, and (e) total compensation.



Salary Bonus Option Grant Option Value Total Comp



Goldberg $388,500 $276,834 70,000 $ 571,200 $1,236,534

Briancon $260,000 $125,000 81,250 $ 663,000 $1,048,000

Lemmo $244,500 $102,841 50,000 $ 408,000 $ 755,341

Merritt $262,500 $125,000 125,000 $1,020,000 $1,407,500

Tilden $249,000 $109,480 80,000 $ 652,800 $1,011,280



According to IDCC's latest 10K, the value of each option granted in 2001, using the Black-Scholes option pricing model, was estimated at $8.16 per share. The option value above is determined by multiplying the number of options granted to each executive in 2001 times $8.16 value per option in 2001.

Mr.Fagan, CFO is not in the above list. In 1999 Mr. Fagan had the same salary and bonus as Mr. Merritt. However, Merritt got promoted to President of ITC and his salary is now more than Fagan's. I would guess that Mr. Fagan's current salary and bonus is between $300,000 to $320,000 and his granted options are approximately 50,000 per year based upon actual data from 1999. Therefore I estimate Mr. Fagan total compensation including the value of the stock option grants to be about $720,000.

Admittedly I do not really know what each executive does and therefore can’t really evaluate and judge the fairness of their pay. However, I would like to say why I perceive some of the executives pay at IDCC as being overly generous and unreasonable. The case in point for my illustration is Mr. Rich Fagan, CFO. I feel that I can evaluate the reasonableness of his salary a little better than others, because I am a CPA with a Masters in Accounting. I have years of experience as a corporate controller and in public accounting with one of the big six CPA firms. I have just chosen to teach, because that is what I enjoy doing most.

Mr Fagan makes about $720,000 per year in salary, bonuses, and stock option grant value. Usually higher-paid CFOs deal with the large, highly complex businesses. Manufacturing and merchandising businesses are much more complex accounting-wise, than are service businesses. IDCC does not have complex manufacturing operations or merchandise inventories either. Neither does IDCC own extensive fixed assets that increase accounting complexities. IDCC does very little billing and invoicing, and has to keep up with only 25 licensees/customers rather than thousands upon thousands of customers. Therefore IDCC has minimal receivables to oversee with the resulting extensive collection efforts needed by most companies. IDCC has virtually no debt, so debt management is not an issue for the IDCC CFO. About the only accounting issues at IDCC are payroll, employee expense reports/reimbursements, SEC financial reports/filings, and income tax returns. It appears to me as though Mr. Fagan is being paid an awful lot of money for a relatively simple accounting job, all things considered.

The job performances of certain executives at IDCC are difficult to analyze due to lack of knowledge about specific job duties. Rip Tilden's position as COO comes immediately to mind. I'm not sure if anyone outside of IDCC is quite sure exactly what Rip's job now entails. We do know that it now excludes individual shareholder contact and relations. The press release announcing Rip's promotion stated the following:

"As Executive Vice President and Chief Operating Officer, Mr. Tilden will be responsible for leading the Company's initiatives to achieve excellence in operating performance. He will manage and coordinate ongoing operations to create a competitive advantage for InterDigital to ensure high levels of performance, customer satisfaction and superior value creation."

I'm just not quite sure what IDCC's operations are? IDCC does not have manufacturing operations or merchandising operations that most COOs would be in charge of. IDCC has licensing operations and engineering operations. However, Mr. Merritt is in charge of the licensing subsidiary, and Dr. Briancon is the Chief Technology Officer in charge of the engineering operations. What types of operations are left for Rip to oversee?

Rip used to oversee communications and public relations. Many shareholders think that IDCC's past communication and public relations efforts produced minimal results. Mr. Tilden is an excellent speaker, and I thought he might be in charge of public communications. However, Rip no longer participates in even the quarterly Conference Calls. Why doesn't IDCC use its best public speaker, Mr. Tilden, to at least participate in the public Conference Calls any longer?

From the latest proxy material as follows:

..."Prior to 2001, we engaged a compensation consultant who analyzed salary and stock-based compensation alternatives and provided recommendations to the Compensation Committee regarding executive salary levels as well as other elements of compensation. This analysis assisted us in setting a baseline from which 2001 increases were made."

I have heard that IDCC’s officer compensation might be based upon a study of Qualcomm and other prominent wireless companies, but I certainly don’t know if this true or not. However, we should not base our compensation on what the large-cap companies are doing, because we are a small-cap company. IDCC’s salaries and compensation should be based upon comparable-size companies in the technology sector. We don’t have the revenues or earnings to match-up our executive pay to that of much larger companies. How many companies were included in the above analysis? How many of these included companies were small-cap technology companies with market caps under $1 billion like IDCC?

An individual owner tried to analyze IDCC’s compensation compared to other small-cap technology companies. Based on his findings, IDCC’s average base salaries and bonuses for the top executives are significantly above the other 17 similar sized technology companies, even though their average revenues were twice that of IDCC’s. He did not try to value the stock option grants into the compensation figures, but noted that most of these companies do have stock options also. However, I would bet these other companies' option grants are not nearly as generous as IDCC’s option grants. Therefore, I bet if the value of option grants could have been somehow factored into the comparable companies’ data, IDCC’s compensation would have blown-away these other small-tech companies’ executive compensations.

http://ragingbull.lycos.com/mboard/boards.cgi?board=CLB00004&read=116119

As of Dec. 31, 2001, IDCC had 54.4 million common shares outstanding. On the same date, IDCC had 10.6m stock options outstanding at a weighted average exercise price of $11.19 per share, and 1.4m warrants outstanding at a weighted average exercise price of $5.51 per share, for a total of 12 million outstanding options/warrants. This equals 22% of the total outstanding shares. In 2001 alone IDCC granted over 5 million stock options, which tremendously exceeds normal percentages for virtually all companies. I do not know of another company that granted stock options of almost 10% of the common shares in just one year. This excessive granting of stock options last year was certainly not based upon any increase in the market price of IDCC stock during 2001.


IDCC also granted over 2.5m stock options in 2000. From a shareholder perspective, there was virtually nothing good accomplished in the year 2000 that justified large option grants. Only one license, and that with Ubinetics, was executed during the entire year. The stock price tanked from $82 to $5. CEO Gercenstein was hired after a very long search, and then was quickly fired within six months. I do not understand how IDCC could justify issuing 2.5m in stock options in 2000 for that miserable year.

According to IDCC's latest 10K, the value of each option granted in 2001, using the Black-Scholes option pricing model, was estimated at $8.16 per share. Therefore IDCC's total option grant in 2001 was valued at over $40 million. Many are now advocating that options should be expensed. Therefore, the value of the options granted in 2001 by IDCC would equate to another 55% of expenses on top of the $73m of recorded expenses in 2001, if options were to be expensed.

The affect of shareholder dilution by stock options is a matter of great concern. Stock options cost the outside shareholders tremendously by reducing the future market price of the stock. Outstanding shares get increased and earnings per share get decreased/diluted when these options are exercised. Most all of the current options are now in the money. The low average exercise price combined with the substantial length of time for these options, probably means that virtually all these outstanding options/warrants will ultimately be exercised. The outstanding options and warrants of 12m combined with 2.5m already exercised in the last three years is an earnings dilution of 28% based on 52m outstanding shares before the 2.5m exercised options. This dilution % does not even include any option grants for 2002. If the future market price of IDCC stock could have gone to $50 per share before dilution, then the 28% dilution factor would subtract $14 from the indicated amount and drop the stock price to only $36.

This dilutive affect of stock options is something that all shareholders need to know about as it will negatively impact the long-term stock price. The exercise of stock options is also the triggering mechanism behind most all of the ongoing insider selling. I don't think that anyone can argue that insider selling is positive for the short-term price of the stock. I think that all shareholders could agree that insider selling is a negative factor upon the short-term stock price, but we might disagree on whether insider selling is just slightly negative or significantly negative.

The recent flood of discretionary insider selling activity at IDCC beginning in the middle of November is another of my concerns. The psychological impacts that all of these ongoing individual SEC form 4s are having upon the stockholders 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 as to management’s perceived ability to resolve these critical events in a favorable manner. Already we did not get the type of decision and updated contract that many of us had hoped for in the Samsung arbitration.

A recap of these insider sales based on the SEC form 4, which trigger an investment alert on each sale, beginning in the middle of November as follows:


Filing Shares Shares Total Percentage

Date Insider Sold Remaining Shares Sold



11/20 Colson 11,000 27,275 38,275 29%



11/20 Briancon 10,000 4,788 14,788 68%



11/21 Kiernan 6,000 38,745 44,745 13%



11/27 Goldberg 12,800 45,485 58,285 22%



12/02 Fagan 11,820 24,379 36,199 33%



12/02 Merritt 8,091 26,262 34,353 24%



12/04 Bolgiano 28,260 126,476 154,736 18%



12/12 Kiernan 37,500 38,745 76,245 49%



1/06 Lemmo 10,000 26,480 36,480 27%



1/08 Miller 10,689 3,201 13,890 77%



The Total Shares owned before the sale is calculated by adding the number of Shares Sold to the actual Shares Remaining after the sale according to the form 4. The Percentage Sold is then calculated by dividing the shares sold by the total shares owned before the sale. I know that the form 4 does not factor in the shares that can be obtained in the future through exercising option grants, but total option grants are not shown anywhere on the SEC form 4. Also 10b5-1 planned sales are not indicated on the form 4. I believe that the only 10b5-1 planned sales in the above were from Bolgiano due to his exercising on expiring options. However, all the rest of the above sales are discretionary and are not preplanned.

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 to enhance their standard of living. 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. Possible exceptions might include an unexpected hardship in an insider’s personal financial situation, or any stock acquired by the insider at the prevailing market price with no additional/special rights thereon.

Unless one of the specific exceptions occurs, allow the insiders to sell only once a year at a predetermined time, such as a few specific days in December, through a 10b5-1 planned sale. This predetermined date could be changed each year. 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 IDCC officials would clearly demonstrate a willingness to address shareholders’ concerns, then I think that the shareholders will be much more supportive of the top management at IDCC.

It also appears that the director compensation at IDCC is extremely high and out-of-line. Execpay.com analyzed the director compensation at IDCC and stated the following:

“In 2001, IDCC outside directors got an average of 42,000 options plus the $15,000 retainer plus expenses. The options and retainer, using the Black-Scholes options pricing for 2001 of $8.16 per share from IDCC's 10-K, were worth $357,720. Directors at the TOP 200 U.S. companies got an average total compensation of $152,626 in 2001.”

http://ragingbull.lycos.com/mboard/boards.cgi?board=CLB00004&read=105729

An article on compensation committees and executive pay as follows:

http://ragingbull.lycos.com/mboard/boards.cgi?board=CLB00004&read=117893

Excerpts from the referenced article:

..."When America's biggest companies decide how much to pay their top executives, most of them leave the decision to a group of their board members known as the compensation committee. In theory, members of this committee are independent enough of the company's executives to deny them a raise or force them to take a pay cut when the company is faring poorly."

..."The study by the New York Times of 2,000 of the largest American corporations, measured by their stock-market value, shows that 420 of them, more than 20 percent, had compensation committees in 2001 with members who had business ties or other relationships with the chief executive or the company that could compromise independence. Dozens of those members were company executives."

..."At more than 70 companies, even the chairman of the compensation committee had such ties, and in nine cases, the chairman actually was an executive of the company."

One of my major areas of shareholder concern dealt with governance issues at IDCC. Are there proper checks and balances with true accountability in place at IDCC, or is too much power and control concentrated in one person? Mr. Campagna it is the understanding of many that you are very involved in the affairs and decisions at IDCC. Because of your weekly and sometimes daily involvement in the affairs at IDCC, you can not properly be considered as a true independent “outside” director.

Mr. Campagna if you are as actually involved in the operations of IDCC to the extent that I am led to believe that you are, then you appear to be like a de-facto operating executive of IDCC. I am sure that there was several reasons for firing ex-CEO Mr. Gercenstein in short order. However, one of the main reasons could have been that Mr. Gercenstein opposed some of your decisions and was not totally "loyal" to you. Mr. Goldberg was not initially viewed as a permanent CEO type, and was originally placed in that position only temporarily. It seems strange to me that only after Mr. Gercenstein was hired and then fired, was Mr. Goldberg suddenly viewed as permanent CEO material.

If you are not really an independent outside director, then I think you should resign from the compensation committee and be replaced by two more truly independent outside directors. This would help assure that there is not even the slightest appearance of a possible conflict of interest. This suggestion would bring the total to three independent outside directors on this extremely important committee.

Mr. Campagna it appears as though continued employment, promotions, and pay at IDCC could all be connected to ongoing loyalty to you. You have the appearance of being in a position to possibly buy loyalty from both the executives and the other directors of IDCC because of your role on the compensation committee. This current situation at IDCC just does not look or smell right, even if there are no actual improprieties whatsoever. You may be totally above reproach, but there just appears to be too much concentration of power at IDCC without properly functioning checks and balances.

InterDigital is certainly not alone, as many corporate officials seem to have forgotten about fiduciary responsibility to the shareholders during the great stock market decade of the 90’s. It is not just the Enrons, Worldcoms, Tycos, etc. but many, many other companies as well. I believe that the time is ripe for shareholders to be more vocal about getting their company’s to return whole-heartedly and quickly to their fiduciary responsibilities. If corporate insiders appear to be doing things that are not in my best interests, then I have a right and I believe a duty to voice my concerns. And that’s what I am doing.

Sincerely,

Ronny Marchman, CPA