Compensation of Mr. Campagna and other outside directors
…”In connection with his service as Chairman of the Board of Directors during 2002, in 2003, Mr. Campagna was awarded 50,000 restricted stock units (“RSUs”). Such RSUs are generally forfeitable if Mr. Campagna ceases to serve as a director before the RSUs vest 2 years after their grant date, do not have voting rights, and are not deemed to be outstanding shares”. (page 5 of proxy)
Mr. Campagna received 50,000 restricted stock units for the latest year. He now has over 300,000 RSUs according to page 17 of the proxy. Mr. Campagna receives the RSU and two years later the restricted shares at no cost to him whatsoever. How much is 50,000 free and clear shares of IDCC stock worth? IDCC stock is now worth around $23 per share x 50,000 shares = $1,150,000.
In addition to the restricted shares as Chairman, Mr. Campagna receives the following in his role as an outside director of IDCC:
…”Each nominee for election to the Board of Directors who is not an officer or employee of the Company (an “Outside Director”) is entitled, upon election or re-election at the Annual Meeting, to receive a grant of non-qualified stock options to purchase shares of Common Stock under the Company’s 2000 Stock Award and Incentive Plan upon their election or re-election to the Board of Directors by the shareholders. These options are granted automatically at the conclusion of the Annual Meeting and provide for the right to purchase 48,000 shares of the Company’s Common Stock (calculated as 16,000 multiplied by the number of years for which the Outside Director was elected to serve), at an exercise price equal to the fair market value of the Common Stock on the date of grant. The options vest one-third each on the date of each subsequent Annual Meeting of Shareholders. Outside Directors who commence service prior to the election of their class receive prorated option grants based on the time remaining prior to the election of their class.
Outside Directors are also entitled to an annual monetary director fee of $15,000 for a full calendar year of service. A pro-rata portion of the $15,000 fee is paid for service of less than a full year. Payment of fees may be made, at the election of each Outside Director, on January 15 of each year, quarterly or deferred. The Company also reimburses Outside Directors for certain expenses incurred in attending Board of Directors and committee meetings and travel on behalf of the Company.” (page 5 of proxy)
Mr. Campagna received 48,000 stock options last year when he was reelected to a three year term on the BOD or the equivalent to 16,000 options per year. The Black Scholes fair market value of IDCC’s options were $8.16 per option for grants made in 2001 x 16,000 options per year= $130,500. (For option grants made in 2002 the fair value is $8.51 per option.) Therefore Mr. Campagna’s compensation package this year totals almost $1.3 million ($1,150,000 RSU value + $130,500 option value + $15,000 cash fees).
Please let’s never say again that Mr. Campagna does not get paid for his “part-time” work as Board Chairman of IDCC.” The words “excessive compensation” come to my mind regarding IDCC’s outside directors.
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