Frank you are already appearing foolish, although it is in your support of this increase in options. You are one of those brainwashed investors who actually believe the big lie that options cost nothing. From your post:
Therefore, stock options accomplish the following: 1) a strong incentive for the employee to focus on stock appreciation, There is a law of diminishing returns that applies to the excessive use of options. After excessive use of the options, managements interests are no longer equally aligned with that of the shareholders. They then sell prior to full realization of the stock's true value which has a negative impact on the price because they know there is more where they came from. This also now increases the amount of shares in the float which dampens any future stock price increases. It is not just management that does this, it is the rank and file that do this too. I know many people, not just in management that exercise and sell their stock as soon as they can to convert it to cash. Many in our society continually spend more than they make and must sell to raise cash. If they were paid with cash they would not be exercising and selling more shares which increases our dilution thereby reducing our percentage of ownership.
2) improved employee retention, Have there been any studies that actually support this nonsense? Before you show me any, don't bother because I know they exist, you can perform a study to prove anything you want. My brother's friend who got a masters in statistics proved for his thesis that there is a 95% probability that if you drink a glass of milk every day while growing up that you will become a heroin addict. Does that make it true? No just that you can distort the figures to prove what you want. Employees will be retained for a variety of reasons, one of which could be the use of options. Excessive use of options does not create loyalty and in fact in a declining market would actually have the opposite impact. You are spouting the big lie when you talk about this as if its gospel.
3) highly efficient cash management, ie. an incentive plan that costs nothing and adds to cash balances. How does it add to cash unless the price rises? If the price rises, then there is a cost and the cost can be huge to its investors. As pointed out many times just look at the fact that there has been a dilution of 34% over the past few years. At the present time that has cost existing investors $340,000,000. Now when the stock rises to let's say a valuation of $5 billion that cost is now $1.7 billion. $1.7 billion for 300 employees when we have the resources to pay them in cash and you don't believe this is an excessive cost? I am not saying that IDCC's employees will be rewarded with that $1.7 billion but we investors will have suffered a decline in our potential wealth of that amount. And yet you continue to believe options are a no cost way of rewarding its employees and we should increase it to over 10,000,000 options available? I don't believe most employees will realize anywhere near what they could because they will have already sold most of their holdings as soon as they were able to.
As far as using it to conserve cash, there is no doubt that there are times in a company's existence that this is not only a good idea but the only idea that can help the company survive. IDCC is way past that point if management is successful in its endeavors. We do not need to conserve cash at the present time. The only thing that issuing more options at this time does is hides the true amount we are paying management. That is why most executives do not want the options expensed. I know better than most on this board that the expensing of options is not an exact science and to some extent it is misleading. But to ignore the cost is even more misleading and as long as managements across wall street continues to give away investors wealth, something must be done and expensing options will help to curb some of the abuse.
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