Re: Proxy - Management Proposal #2 …
IF you are ready for the management to drive share price now, then VOTE NO. Send the clear message to management that no more additions to the 2000 Plan will be approved. IF management wants to make money on the stock, it is now time to drive the price per share, NOT the number of shares they control. It is now time to stop the back-end loaded license deals, bring in the cash from licensees, turn on the PR, hold back discretionary insider stock sales, and drive the SHARE PRICE for the benefit of all shareholders (including management).
IF you believe (as I do) that 5,603,153 shares remaining available (see proxy page 18) under the 2000 (and prior Plans) is an adequate ISO pool at this time then vote NO.
IF you believe management should NOT be rewarded for their choice to deplete the 2000 Plan option pool early in its 10 year life then vote NO.
IF you want maximum share price upon sale of the company then vote NO since all unvested ISO shares will immediately vest upon any “change in control” of the company (see proxy). You should realize that when acquirers buy any company, the share price is determined from the total ENTERPRISE VALUE (e.g. market cap plus some premium) divided by the FULLY DILUTED SHARES OUTSTANDING including all ISO shares granted since the options will ALL VEST upon sale.
IF you want to maximize the return to YOU on your investment in IDCC stock then vote NO. Management proposes that you earn a return on less than $0.62 (that’s 62 CENTS) for every DOLLAR YOU have INVESTED in IDCC stock. The rest of YOUR return will go to employees. So, if you want to keep the gains on your hard earned after tax cash investment in IDCC stock then VOTE NO. Otherwise, in effect 38% of YOUR gains will go to employees.
IF you want management to be aligned with your interests then vote NO. If you want our executives to be judicious, thoughtful, aligned with cash investors, and to cherish their stock option position in IDCC when it comes to granting ISO then vote NO. This alignment between management and investors won't happen UNLESS and UNTIL investors vote NO to any further dilution. As long as shareholders keep voluntarily giving up their wallet, management will continue asking for it.
IF you want to believe management when they make a written statement to you, then vote NO since the 2000 Plan was sold by management to shareholders as a 10 year plan and was approved on that basis. IF investors had known then that management actually intended to request 2M more shares in 2002, plus another 2M shares not approved by shareholders (see proxy), plus another 5M more shares in 2003, then investors would have certainly viewed the already generous 2000 Plan very differently indeed at that time if they knew it would quickly evolve into a 19M share Plan equal to 38% of the company.
IF you believe (as I do) that $400K average pay (including bonus) for the top 5 executives is appropriate pay for performance at IDCC (see proxy page 12), then vote NO. $400K is a generous pay package for any high performance mid-cap executive even with little or no stock options.
IF you believe as I do that 38% dilution is unacceptable, then vote NO. On the other hand, if 38% IS acceptable to you, please consider what amount of dilution would be UNacceptable to you? Is it 50%? 75%? How about 99%? What is your limit for dilution? IMO, 10% of the company and no more was the right amount for the 2000 Plan for its entire 10 year life. However, Management requested 10M shares (=20% of the company), double what I considered reasonable for IDCC based on my 20 years leading venture capital and Fortune 100 M&A deals. Since 2000, management added another 4M shares (2M were approved by shareholders and 2M were not per the proxy, for another 8% of the company). This year, management is requesting yet another 5M shares (10% of the company) for a total of 19M ISO shares equal to 38% of the company since the last ISO plan ended in 1999!! So, IF you agree with me that transferring 38% of a public company (that is currently worth over $1 Billion) to employees is not appropriate, then vote NO.
Shareholders - Open your eyes and see the ISO elephant on the table. The time is overdue for management to drive the price per share, not the number of shares they control. Vote NO to any more dilution.
Regards,
Corp_Buyer
AI
