InterDigital Inc (IDCC)

[Corp_Buyer]

BSW- IDCC is generous compared to RMBS…

Please don’t spew out RMBS again as a comparable to IDCC for ISO plans. Based on a very quick look at RMBS, not a thorough comparison, there are many very significant differences that frankly demonstrate how much more generous the ISO plan is at IDCC as compared to RMBS e.g.:

* It appears the RATE of ISO grants at IDCC in recent years averages more than DOUBLE the latest rate for ISO grants at RMBS (RMBS “granted options to purchase 3,564,000 shares of Common Stock [about 3.6%] to all employees during fiscal 2002 [RMBS has about 100M shares outstanding]”);

* IDCC does not provide warrants for customers but RMBS does (“warrants for 1,600,000 shares of Rambus common stock to be issued to various ... licensees upon the achievement of certain product qualification .. targets”) [btw, Intel had other warrants that were cancelled]

* IDCC does not repurchase shares specifically to reduce dilution from ISO, but RMBS does (“In October 2001, our board of directors approved a share repurchase program of our common stock principally to reduce the dilutive effect of employee stock options.") [RMBS has about 10M shares subject to repurchase];

* IDCC ISO shares vest over 2 years (RSUs) to 3 years versus much longer for RMBS (“options typically vest over 48 months or 60 months”)

* IDCC does not require any stock price target for ISO shares to vest but RMBS does (“vesting for a portion of the CSES and options granted in fiscal 1999 was contingent on an increase in the price of our common stock to greater than $50 per share for 30 consecutive days.”)

* IDCC does not expense ISO options versus RMBS which apparently does (“a $171.1 million employee stock-related compensation charge was taken in fiscal 2000 related to Common Stock Equivalents granted to our Chief Executive Officer and President and options granted to our employees.”)

All quotes above were taken from the recent 10K and Proxy SEC filings for RMBS, per the following links, see more detailed excerpts below):

http://www.edgar-online.com/bin/cobrand/finSys_main.asp?nad=&formfilename=0001012870-02-004526&a....

http://www.edgar-online.com/bin/cobrand/finSys_main.asp?nad=&formfilename=0001206774-02-000015&a....

From the Proxy:

“These options typically vest over 48 months or 60 months and thus require the employee's continuing services to us. Additional options may be granted to current employees to reward exceptional performance or to provide additional unvested equity incentives. The vesting of these additional stock options usually will not begin until previous option grants have become fully vested.”

From 2002 10K:

Employee Stock-Related Compensation Expense. As discussed below in the section entitled “Contingent Warrants, Common Stock Equivalents, and Options,” a $171.1 million employee stock-related compensation charge was taken in fiscal 2000 related to Common Stock Equivalents granted to our Chief Executive Officer and President and options granted to our employees.

In October 1998, our board of directors authorized an incentive program in the form of warrants for a total of up to 1,600,000 shares of Rambus Common Stock (the “DRAM incentive warrants”) to be issued to various rdram licensees upon the achievement of certain product qualification and volume production targets.

In the first quarter of fiscal 2000, we granted our Chief Executive Officer and our President a combined total of 2,000,000 Common Stock Equivalents (CSEs) and to our employees approximately 2,160,000 options to purchase our Common Stock at $2.50 per share. An additional 494,500 of these options were granted to employees in fiscal year 2001. Vesting of these CSEs and options was contingent upon the achievement of key indicators of our success. vesting for a portion of the cses and options granted in fiscal 1999 was contingent on an increase in the price of our common stock to greater than $50 per share for 30 consecutive days. This target was achieved by the end of the second quarter of fiscal 2000, and resulted in a $171.1 million employee stock-related compensation charge taken in the same quarter.

In october 2001, our board of directors approved a share repurchase program of our common stock principally to reduce the dilutive effect of employee stock options. Under the share repurchase program, we are authorized to purchase in open market transactions up to five million of our shares of outstanding Common Stock over an undefined period of time. We repurchased 3.9 million shares at a cost of $23.9 million in fiscal year 2002. In October 2002, our Board of Directors approved the purchase in open market transactions of up to an additional five million of our shares of outstanding Common Stock.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

The following table summarizes our equity compensation plans as of September 30, 2002:

Equity Compensation Plan Information

Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) Weighted-average exercise price of outstanding options, warrants and rights (b) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders 17,043,268 $13.1651 1,688,295
Equity compensation plans not approved by security holders 9,720,012 $13.0185 4,239,707

Total 26,763,280 5,928,002


Diluted Number of shares used in per share calculations: 102,100

Options to purchase 15,654,420 … shares of Common Stock were not included in the computation of diluted shares for the years ended September 30, 2002

The number of outstanding shares of the registrant’s Common Stock, $.001 par value, was 97,477,563 as of October 31, 2002.

In May 1997, the 1990 Stock Plan was terminated and the 1997 Stock Plan was adopted. The 1997 Stock Plan authorizes the issuance of incentive stock options and nonstatutory stock options to employees and nonstatutory stock options to directors, employees or paid consultants of the Company. Rambus has reserved 20,494,094 shares of Common Stock for issuance under the plan. The plan expires ten years after adoption …

In October 1999, Rambus adopted the 1999 Nonstatutory Stock Option Plan, which authorizes the issuance of nonstatutory options to employees and consultants. Rambus has reserved 14,800,000 shares of Common Stock for issuance under the plan.

Options Available for Grant Options Outstanding Number of Shares Weighted Average Exercise Price Per Share
Outstanding at September 30, 2002 5,928,002 26,763,280 $ 13.11


As of September 30, 2002, a total of 32,691,282 shares of Common Stock were reserved for issuance under all stock option plans.

In the first quarter of fiscal 2000, Rambus granted to its Chief Executive Officer and to its President a combined total of 2,000,000 Common Stock Equivalents (CSEs) and to its employees approximately 2,160,000 options to purchase Rambus Common Stock for $2.50 per share. An additional 494,500 of these options were granted to employees in fiscal 2001. Vesting of these CSEs and options was contingent upon the achievement of key indicators of success for Rambus. Vesting for a portion of these CSEs and options granted in fiscal 1999 was contingent on an increase in the price of Rambus Common Stock to greater than $50 per share for 30 consecutive days.

Tate ........... 48 Chief Executive Officer and Director. Geoff Tate was appointed Chief Executive Officer and Director in December 1999. Mr. Tate joined us in May 1990 as President, Chief Executive Officer and Director. From February 1989 to January 1990, Mr. Tate was Senior Vice President and Corporate Officer, Microprocessor and Peripherals at Advanced Micro Devices, Inc. ("AMD"), a semiconductor manufacturer.”

The following table sets forth information regarding options granted during fiscal 2002:

Name Number of Securities Underlying Options Granted

Geoff Tate 100,000
David Mooring 100,
John D. Danforth 400,000
150,000
Robert K. Eulau 0
Ed Larsen 0


(2) We granted options to purchase 3,564,000 shares of Common Stock to all employees during fiscal 2002

Name Exercise Realized

Geoff Tate -- -- 723,600 1,933,334
David Mooring -- -- 483,330 1,896,670
John D. Danforth -- -- 68,703 481,297
Robert K. Eulau -- -- 164,582 510,418
Ed Larsen -- -- 315,832 456,669