Danny- I applaud your confidence in management and I agree that overall confidence in management is required to stay invested in a stock. However, the view that shareholders must "either be for or against management in totality" seems irresponsible.
Separate proxy votes on issues are provided and intended for responsible shareholders to think about each one and vote thoughtfully on each proposal, not blindly according to management's personal desires. When you vote in politics, do you blindly follow your party's line and vote every issue according to their recommendation? Or, do you consider each candidate and ballot measure and make an informed decision on each one? Do you believe you are either "for or against [your political party] in totality"? The same principle of responsible voting applies to shareowner voting.
It is crucial to realize and acknowledge that management compensation is a natural area of tension between management, who always wants MORE and will continually request increasing pay, and owners who should want to expend the minimum, so management compensation issues such as ISO are specifically put to shareholder vote for the company owners to make an informed and responsible judgment.
In the case of IDCC, many folks, myself included, believe the total management compensation package is quite rich already and well over the minimum required, based on the 10M shares Plan in 2000, plus another 2M shares increase in 2002 (just last year), plus another 2M shares "not approved by shareholders" (see proxy), plus significant increases (about 50%) in base pay and bonuses over the past few years. No executive has left the company due to lack of compensation. Instead, we see a continuous cycle of requests for large pay increases every year.
The fact that the stock price has gone up recently is no reason to make a long term significant increase in the pay package at the company. Really, the recent runup in share price is long overdue as was the Ericy settlement and many feel both the settlement and the resulting share price are disappointing. And there are concerns about delays in completing the expected 3G conracts. But again, the short term share price and expected news events are no basis to make long term pay decisions, IMO.
To sum it up for me:
* I still love this company and stock based on fundamentals (technology, market, etc., including management);
* I do not see the Q1 CC as a long term make or break event;
* I do have confidence overall in management;
* I expect management to WANT more pay:
* I infer that management has a large personal stake in getting proposition #2 for 5M more ISO shares approved, and that includes somehow creating an atmosphere of exuberance before the ASM to encourage fence sitters to approve the measure even while perhaps restraining the stock price below its full potential via insider sales, delays in 3G licenses, etc.;
* I realize that management and shareholders have a natural tension on the issue of approving more ISO shares;
* After taking a hard look at Proposition #2, I have concluded that defeat (i.e. "NO" vote) is in the best interests of the company and shareholders by sending the clear message to management that it is now time for them to drive the share price, not the number of shares they control, and to stop the bleeding from dilution;
* I am further disturbed by a feature of the 2000 Plan (pointed out by WW last night) that allows for management to award ISO grants at BELOW FMV, and I believe this feature greatly undremines the incentive purpose of the Plan to increase share price. For this reason alone, I believe a "NO" vote is warranted on the request for 5M more ISO shares.
Danny, at least consider all the propositions separately on their individual merits, rather than give management a "blank check" just becuse you have "total" confidence in them. It is the right thing to do.
Investing in the stock, how you feel about management, and approving a pay increase, are all separate issues and decisions, that all warrant your "detailed" assessment, IMO. Thank you for your consideration.
Regards,
Corp_Buyer
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