Then you claim I used “flawed data” regarding executive compensation at IDCC and thus draw invalid conclusions thereon. First my compensation data came from IDCC’s proxy material mailed in 2002. Four of the five highest paid IDCC executives in 2001 had total compensation packages of over $1 million when the value of granted options were factored in. Almost every reasonable businessman would conclude that is way too much compensation for a company the size of IDCC. The total 2001 compensation of these five highest-paid executives of $5,458,000 represented over 10% of IDCC’s total revenues of $52.5m in 2001. I don’t have to compare IDCC to any other company to know that this was excessive.
Of course you do. For example, your use of the 2001 $52.5M sales number completely ignores the fact that under the 1999 Nokia deal, Nokia was contractually obligated to start paying recurring royalties in early 2002 subject to MFL provisions.
The larger point is that executive packages are measured over a period of time (3-5 years) to encourage them to balance short-term goals with medium-term and long-term goals. Taking one transition year out of context hardly reflects well on you.
From 1995 to 1998, IDCC generated more revenues from paid-up licenses and engineering contracts than recurring royalties. It exited 1998 with a recurring royalty stream (pre-SAB 101) of $1.5M for the entire year!
From 1999 to 2002, IDCC still generated more revenues from paid-up licenses and engineering contracts than recurring royalties at the start of the Nokia contract, but it managed to exit 2002 with a recurring royalty stream of more than $20M (post-SAB 101) in the 4th quarter alone!
The quality of IDCC's pre-settlement revenue stream was already improving before the 2003 settlement! I realize that this type of qualitative assessment tends to get drowned out by your type of rigid quantitative approach, but clearly this company is being run by risk-takers, not management by numbers types. That's why they've created more than $1B in market capitalization during the last 5 years!
An individual owner did a study of 17 small-cap technology companies. His findings were that IDCC’s salary and bonuses were significantly more than the other companies, even though these comparable market-cap company’s average revenues were twice that of IDCC.
Like I said this data is misleading. There is nothing to stop you from using this data alongside the basket of IP companies I provided to get better perspective. The reason you won't even do that is because it doesn't support your excess compensation thesis.
Consider that the basket of IP companies I mentioned have higher compensation levels than the original basket of 17 small-cap companies. And consider that IDCC's packages, while higher than the 17 small cap companies, are actually at the bottom of the range compared to other IP companies like ARMHY and RMBS.
That undercuts your claims. Period.
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