Loop re fact from fiction continued. Your comments in bold.
He has declared himself as an outside director and we all know he could declare otherwise. He has done this in the face of the new institutional rule and he knows his compensation figure for an outside director sticks out like a sore thumb.
Mr. Campagna can not have it both ways. If he is really an independent COB, then his compensation is and has been very excessive over the years. If he has deserved his compensation due to extensive services provided to IDCC over the years, then he is not truly an independent director and should not even be on the compensation committee and nominating committee, much less chairman of both.
I had previously suggested that Mr. Campagna should resign from the compensation committee, because he is an independent outside director in name only but not in actuality IMO. Mr. Campagna seems to be so intimately involved in the operational affairs and decisions at IDCC that he appears to be almost like a defacto CEO. How else can he justify being the most highly compensated individual at IDCC?
The latest ISS update for proxy voting policies would also probably classify Mr. Campagna as an inside director, and not an independent outside director, and possibly Mr. Roath also. In 2003, ISS recommended that shareholders Withhold votes from affiliated outsiders, as well as insiders, that sat on the audit, compensation, and nominating committees. ISS is clarifying its definition of inside and affiliated directors to include a broader number of relationships. A director is an “insider director” if he or she is:
• An employee of the company or its affiliates, • A non-employee officer of the company if he is among the five most highly compensated individuals,
Mr. Campagna probably fit ISS's expanded definition of an "inside director", and not an independent outside director, because they are among the five most highly compensated individuals. Mr. Campagna is also currently chairman of both IDCC's Compensation Committee and its Nominating Committee. For an "inside" director to be on either one of these two committees is totally improper according to ISS policies for proper corporate governance.
As far as taking care of his underlings, there is not one of us on this board that would not reward loyalty in the position HC found himself in when he took over.
It is not right to excessively compensate oneself, and then to excessively compensate others out of “loyalty”. This policy just reeks of cronyism, and is not ethical IMO. Mr. Campagna has a fiduciary responsibility to the owners of the corporation, to do what is in our best interests, and not what is in his own best interest or his "loyal" followers.
I believe that Mr. Campagna has to be one of the highest compensated non-executive board chairmen of any small-cap company of less then 1 billion dollars, from 1997 through 2004. He was the highest compensated individual at IDCC for each of these years. Harry’s cohort on the compensation committee for so many years was Mr. Roath. Additional compensation to Mr. Roath over the years, beyond the basic outside director compensation, linked as follows to a previous post:
Neither Mr. Campagna nor Mr.Roath have wireless industry experience. Both individuals are supposedly performing services that are part-time in nature rather than full-time. Why are two independent outside directors among the most highly compensated individuals at IDCC? This compensation is very unusual, and needs to be fully explained and justified to the outside shareholders.
Next the remaining outside directors receive what is way above normal compensation. The base compensation for IDCC’s outside directors was previously 16,000 vested stock options per year plus $15,000 cash compensation. 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. I read an article in Forbes dated May 10, 2004 and entitled Blame the Board, which stated that the eleven independent outside directors of Qualcomm only receive annual compensation of a modest $27,000 each.
The above analysis is just the base compensation of each IDCC outside director. It does not include the additional compensation received by “outside” directors, Campagna and Roath. Also the base compensation does not appear to include the initial compensation of the new outside directors for agreeing to serve on IDCC’s Board of Directors. Therefore, I looked over the December 2003 F4s for the three new outside directors.
Mr. Shaner, Mr. Zabarsky, and Mr. Kamins 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 grant 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 you are still entitled to the base RSU grants when officially elected to the Board of Directors also.
Finally IDCC’s compensation to its executives is excessive IMO. They have received a ton of stock options over the years. They are now receiving additional compensation in two separate plans: (1) the new long-term incentive plan in cash incentives and RSUs incentives, and (2) a bonus plan which include even more cash and even more RSUs. My latest thoughts on IDCC’s current additional compensation plans linked as follows:
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