“done a great job in the last year to address certain issues, insider selling, new agreements, new board members...”
Jai,
Any improvements must have been management initiatives motivated by shareholder benefit and not prompted by such events as:
* NOK court filing July 22, 2003 accusing management of a pump and dump scheme: “during the past 12 months, 15 IDCC insiders have sold more than 615K shares, with half of that coming during the 44% rally since the Ericsson settlement.” (NOK referring to their WSJ article exhibit)
* Heartland fund website publicly refers to management greed: “We believe management's request for an additional 5,000,000 shares borders on outright greed.”
* Shareholders powerful vote to defeat management request for more stock options (2003 ASM)
* Stock analyst report publicly calling for sr. management change (does anyone have this reference handy?)
* Recurring quarterly disclosures of significant increases in Directors and Officers liability insurance (reflecting high risk of corporate governance policies). Per 1Q03 disclosure: “Operating expenses increased … mainly as a result of higher directors' and officers' liability insurance premiums…”,)
* New laws e.g. Sarbanes-Oxley, management certifications, etc.
* Shareholder complaints and letters to management with concerns about insider selling. Letters by Ronnie and Espy were posted on this board. Loop summed it up well in post # 32631: “It may be legal to sell, but it is also not logical based on the information that they have just provided the investing public in the PR and the CC. This is where the breakdown in trust occurs.”
* ISS recommends against more stock options due to their objective assessment of management total compensation (2Q03). What is the total compensation you ask? See Ronnie’s calculations (post #3893) from a few years ago: “latest 10K, the value of each option granted in 2001, using the Black-Scholes option pricing model, was estimated at $8.16 per share… the total estimated compensation of each executive… follows: Goldberg $1,236,534 Briancon $1,048,000 Lemmo $755,341 Merritt $1,407,500 Tilden $1,011,280 … Fagan… about $720,000. … I perceive some of the executives pay at IDCC as being overly generous IMO… total option grant in 2001 was valued at over $40 million… would equate to another 55% of expenses on top of the $73m of recorded expenses in 2001, if options were to be expensed”
Jai, some of the above items, such as the analyst report calling for management change and the Heartland Fund public reference to greedy management are unprecedented in my experience.
Taken all together, the above issues and events are indicative of something very different than “they have been doing a good job for the shareholders”.
“the ones who are patient enough will be richly rewarded.” – actually, many folks are invested in IDCC because we think a sufficient reward is coming despite the above management issues, not because management is “doing a good job” for shareholders.
All JMVHO,
Corp_Buyer
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