Replies to post #71651 on InterDigital Inc (IDCC)

[olddog967]

ziploc: From the proxy statement:

Compensation of Directors
 
Each nominee for election to the Board of Directors who is not an officer or employee of the Company (an “Outside Director”) is entitled, to receive a grant of 6,000 Restricted Stock Units (RSUs) under the Company’s 1999 Restricted Stock Plan upon their election or re-election to the Board of Directors by the shareholders. These RSUs are granted automatically upon re-election at the conclusion of the Annual Meeting and vest 2,000 each year beginning the first anniversary of their re-election by the shareholders. In addition, at each Annual Meeting all Outside Directors will be entitled to receive 2,000 RSUs vesting one year later; provided, however, those Outside Directors who continue to have options vesting under the Company’s previous director compensation program will not be eligible to receive this annual automatic grant of 2,000 RSUs until the Annual Meeting following the final vesting of such options.
 
Outside Directors are also entitled to an annual monetary director fee of $25,000 for a full calendar year of service. A pro-rata portion of the $25,000 fee is paid for service of less than a full year. Outside Directors also receive a $5,000 fee per annum for each committee membership, or a $15,000 fee if they serve as a Committee Chair ($30,000 in the case of the chair of the Audit Committee). Payment of fees are made on a quarterly basis or may be deferred by the director. The Company also reimburses Outside Directors for certain expenses incurred in attending Board of Directors and committee meetings and travel on behalf of the Company.

[ams13sag]

Oh the goodies will come, and come soon. Harry will see to that, and at the next ASM he will look all of those who visit the great man in the eye and tell them that he intends getting all of the money back for using the companies inventions. I wonder did he ever hear of Ericy, Mororala etc. By then he will have got another few millions into his piggy bank.

AMS

[rmarchma]

Ziplock re compensation of new directors

Mr. Shaner, Mr. Zabarsky, and Mr. Kamins each received initial compensation upon agreeing to serve on IDCC’s BoD. From the December 2003 F4 filings, they each received 6,000 RSUs and 2,000 stock options with an exercise price of about $19.60, the closing stock price on the date of grants in December 2003. Thus, each new outside director received compensation of $117,600 each for the RSUs (6,000 x $19.60 stock price on date of grant) and $31,980 each for the stock option grants (2,000 x Black-Scholes valuation of $15.99 per option for grants in 2003) for a total estimated INITIAL compensation of approximately $150,000 each.

I think the new directors are still entitled to the base ongoing RSU grants when officially elected to the Board of Directors also. Beginning in 2004, IDCC’s base annual compensation for each outside director is now 2,000 vested RSUs each year from their reelection + 2,000 additional RSUs at each annual ASM + $25,000 cash. In addition, outside directors will also receive a $5,000 fee per annum for each committee membership, or a $15,000 fee if they serve as a Committee Chair ($30,000 in the case of the chair of the Audit Committee, who is currently Mr. Roath).

I believe that these 4,000 RSUs per year will vest on the day of the Annual Stockholder Meeting. They will be valued at the fair market value on the date of grant. If the market value is $20 per share at the ASM date, then the indicated RSU compensation would be $80,000 per outside director per year. When coupled with the cash compensation of at least $30,000, IDCC’s base compensation per outside director is significantly more than Qualcomm and many other companies. This base compensation does not even include the additional annual compensation for Mr. Campagna and any special compensation for Mr. Roath.

I think it would be much better for IDCC, if they would just pay cash to the outside directors, and require them to purchase IDCC shares on the open market with a certain percent of the cash compensation. That way all the directors would have some of their own money invested in IDCC, and at risk just like all the outside shareholders. There would be no additional dilution associated with stock options or RSUs. And last but not least, the directors’ purchases of IDCC stock on the open market would also be reported as insider purchases, which are looked upon very favorably by the investment community.