Replies to post #41282 on InterDigital Inc (IDCC)

[rmarchma]

Sophist you asked:

..."I'm not really sure as to the point of your dragging up the "insider selling" and "excessive options" conundrum again."

First I was replying to a comment from jimlur re investors putting heat on management, which I didn't quite understand what he meant by that particular comment. Some of us have tried to do that on certain issues, such as options and insider selling. Second when I get frustrated with IDCC's management, I vent some. I got upset by the extra $27m billing from the insurance carrier, which was not disclosed in the CC but included in the 10Q. The exact amount of the insurance reimbursement should have been a loose-end already tied-up by our management before Ericy was settled. How could they let something that important slip through the cracks?

You also asked:

..."I would ask you, what would you prefer, "insider selling" with continually increasing share price OR no "insider selling" with stagnant or declining share price?"

I would prefer a significantly increasing share price with no discretionary insider selling. If they must sell, then they should use 10b5-1 prearranged trading plans each year as I have already suggested to them in email as follows:

Therefore, what I would like to suggest is for IDCC to establish a 10b5-1 planned sale for each year, and eliminate discretionary insider selling. The only exceptions to the discretionary insider selling policy should be for a very limited number of clearly defined situations. Possible exceptions might include an unexpected hardship in an insider’s personal financial situation, or any stock acquired by the insider at the prevailing market price with no additional/special rights thereon.

Unless one of the specific exceptions occurs, allow the insiders to sell only once a year at a predetermined time, such as a few specific days in December, through a 10b5-1 planned sale. This predetermined date could be changed each year. If it is part of a 10b5-1 planned sale, then insiders are allowed to sale no matter if you have material undisclosed information or not. A press release could accompany this once-a-year planned 10b5-1 sale to help explain the insider selling to the investment community. If insider selling is part of a planned sale, then much of the negative implications are greatly minimized.

Some of the benefits of using 10b5-1 Trading Plans are as follows:

“Boosting employee morale by providing a measure of liquidity with respect to stock compensation;

Reducing the risk that employees may violate the insider trading laws;

Minimizing the possibility of adverse publicity resulting from transactions in company securities by executives that are not pursuant to Trading Plans; and

Reducing the risk of shareholder lawsuits, which frequently rely on unusual sales by senior executives to demonstrate… claims of market manipulation.”

The above and more information about 10b5-1 Trading Plans from the following link:

http://www.mintz.com/newspubs/Bus-Fin&Sec/10b5-1tradingplans.pdf

[0nceinalifetime]

You are missing the main point of those who cry foul of the insider selling (including the first analyst to ask a question during the quarterly conference call).

"If Nokia had accepted the 2G rate set by terms of the Settlement and not asked for arbitration (which Management clearly expected to be the likeliest result), IDCC would be trading at twice or more the current share price. It could then be said that "insiders" were selling BELOW the ascending share price for almost the entire past year."

Nokia did not accept that the Ericsson agreement defined the rate they would pay. The analyst who asked the question about insider selling made it clear that the concern was that management may have been tipped off during the license negotiations that Nokia was not seeing it IDCC's way and decided to unload some of their shares before that information was official and public.

And when you think about it, it's pretty obvious management must have known that Nokia did not see the Ericsson agreement as defining their royalty obligations or else the negotiations wouldn't have taken so long. If there was no disagreement there would be no need for protracted negotiations. Remember, over a year ago IDCC management characterized the Nokia agreement as being very definite, not wishy-washy.

So your scenario whereby Nokia did agree to the Ericy rate is completely irrelevant because if they had agreed, there would be no charges of insider selling before the bad news was made public (because there wouldn't be any bad news).

Once