Danny in a previous post you stated something along the lines of investors tilting at windmills in trying to change the compensation at IDCC and to a larger extent, across Wall Street. I can't speak for other investors but at times such as these, I believe we need to tilt at windmills.
I don't believe IDCC management is much different than most other publicly traded companies in their dealings with compensation and taking what 10 years ago would have been obscene and almost criminal IMO. Unless and until investors speak up and unless management hears the chorus of disgruntled investors, it is my opinion that investors returns in the future will not even come close to those of the past. In the past, the annual dilution due to options and stock grants was minimal and the average historic long term rate of return in the overall stock market was 10-12% per year. That is until the 1990's. If it continues to be acceptable for management of companies to dole out stock certificates as if they are water,diluting shareholders ownership by 3, 4 5% or more annually it will surely hurt the long term rates of returns of investors in the future.
We have 2 competing camps when it comes to investing in public companies, investors and employees. Unfortunately for investors an experiment in compensation went terribly wrong IMO, and that is the doling out of stock as a form of compensation in the misguided impression that it would align the 2 camps. Employees should be motivated based on their overall job satisfaction which includes fair compensation and also their desire to keep their jobs among other things. If they feel the companies in which they work are great companies they should use some of their own money which includes the bonuses that they could have received for jobs well done to invest in those companies. Then and only then would the 2 camps be aligned because they would both have some of their own skin in the game.
In the past, wall street had the support of Congress in allowing and even forcing the accounting standards boards to mandate that this compensation be left off the income statement. How ludicrous was that? Let's hide from investors the true cost of employing people. Unfortunately, many investors still believe it is ok to ignore this very real compensation expense. As a simple example, take a look at the buybacks announced to date for IDCC, the current one costing shareholders $200 million. This huge buyback wont even get us back to where our outstanding stock was less than 10 years ago. How is that free? The sad part about the excessive grants of stock didn't occur when IDCC was hurting financially, pre 1997. The huge grants actually occurred when they began becoming flush with cash beginning in 99 and forward. That is when the real abuse began to occur at IDCC and other companies.
I am all for compensating individuals well for a job done well. My big problem is with IDCC and other companies is that they hide behind veils of secrecy when implementing bonuses to themselves. Today our stock price is almost the same as it was 3 years ago when we had that watershed event called the Ericy settlement. How many top 6 manufacturers are licensed since then to 3g agreements? How many times has the current management with the BOD approval changed the compensation plans to reward themselves? How many millions have mediocre managers at IDCC earned in that period? Nobody knows because there are so many gimmicks used to measure management compensation due to the issuance of stock. What are their current goals and are those goals fully aligned with the owners of IDCC? Nobody knows because except for that one plan that was shared with investors back in 2000, everything else concerning IDCC's goals are a secret.
I know I am guilty of beating a dead horse in my complaining about IDCC management and its compensation which I deem excessive. Is it excessive when measured against others? I really don't know but I do know unless the average investor starts to really understand what the true cost of compensation is, and then starts complaining about it, there is absolutely no chance of anything changing in our future as far as investing goes. As you know, IDCC represents the single biggest investment I have in a public company and that is why I use IDCC to sound off. Is this tilting at windmills trying to get others to understand the issues facing not only IDCC but all public companies? It might be but you have to try someplace. Just because every company may be taking excessive compensation doesn't make it right and it is time investors speak up IMO. Our financial future will depend on it.
As far as running the company, as you have stated nobody on this board has enough experience with a company like IDCC to say whether or not we could do it better. Honestly, I haven't seen anyone really come forward and say they could do it better either. What I have seen is investors speaking their mind in what they want to see changed. It is every investors right to speak up when they see abuse of corporate powers or see what they perceive as abuse of powers. If enough investors speak up, management will have no choice but to address the issues. Hopefully they address the compensation issue and spell out what the goals are for the company and its employees. In that way investors would have a much better understanding as to what our future could be. Right now investors in IDCC are investing in a dream without knowing whether or not management is having that same dream because we don't know what is expected of them.
Tilting at windmills, sometimes it is needed.
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