SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant /_/
Check the appropriate box:
/_/ Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/_/ Definitive Additional Materials
/_/ Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
INTERDIGITAL COMMUNICATIONS CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No Fee Required.
1) Title of each class of securities to which transaction applies:
_____________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
_____________________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
_____________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
_____________________________________________________________________________
/_/ Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or schedule
and the date of its filing.
1) Amount previously paid: _________________________________________________
2) Form, Schedule or Registration No. ______________________________________
3) Filing party: ___________________________________________________________
4) Date filed: _____________________________________________________________
___________
*Set forth the amount on which the filing fee is calculated and state how it was
determined.
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<PAGE>
INTERDIGITAL COMMUNICATIONS CORPORATION
781 Third Avenue
King of Prussia, Pennsylvania 19406-1409
-------------------
Notice of Annual Meeting of Shareholders
to be held June 3, 1999
-------------------
TO THE SHAREHOLDERS:
The Annual Meeting of Shareholders of InterDigital Communications
Corporation (the "Company") will be held at the Valley Forge Hilton, King of
Prussia, Pennsylvania, on June 3, 1999, at 2:30 p.m. local time, for the
following purposes:
1. To elect two directors of the Company;
2. To ratify the appointment of Arthur Andersen LLP as independent
accountants to examine the financial statements of the Company for the year
ending December 31, 1999;
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Only holders of record of Common Stock at the close of business on April
30, 1999 are entitled to notice of and to vote at the meeting.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. YOU ARE
CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR NOT YOU EXPECT TO
ATTEND IN PERSON, YOU ARE URGED TO COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY
CARD IN THE SELF-ADDRESSED ENVELOPE, ENCLOSED FOR YOUR CONVENIENCE, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU DECIDE TO ATTEND THE
MEETING AND WISH TO VOTE IN PERSON, YOU MAY REVOKE YOUR PROXY BY WRITTEN NOTICE
AT THAT TIME.
By Order of the Board of Directors
/s/ William J. Merritt
----------------------------------
William J. Merritt, Secretary
April 30, 1999
<PAGE>
INTERDIGITAL COMMUNICATIONS CORPORATION
-------------------
PROXY STATEMENT
The following information is furnished in connection with the solicitation
of proxies by the Board of Directors of InterDigital Communications Corporation,
a Pennsylvania corporation (the "Company"), for the Annual Meeting of
Shareholders (the "Meeting") to be held at the Valley Forge Hilton, King of
Prussia, Pennsylvania on June 3, 1999, and at any adjournments or postponements
thereof. The approximate date on which this Proxy Statement and the accompanying
proxy will be first sent or given to shareholders is May 3, 1999. The principal
executive offices of the Company are located at 781 Third Avenue, King of
Prussia, Pennsylvania 19406-1409.
The record date for determining shareholders entitled to vote at the
Meeting has been fixed at the close of business on April 30, 1999 ("Record
Date"). As of such date, there were 48,533,245 shares of the Company's
Common Stock outstanding and entitled to vote. Each share of Common Stock
entitles the holder to one vote, and votes may not be cumulated in the election
of directors. Holders of the Company's $2.50 Cumulative Convertible Preferred
Stock ("$2.50 Preferred Stock") are not entitled to vote at the Meeting. Under
Pennsylvania law and the By-Laws of the Company, the presence of a quorum is
required for each matter to be acted upon at the Meeting. The presence, in
person or by proxy, of holders of the Common Stock entitled to cast at least a
majority of the votes which all holders of the Common Stock are entitled to cast
will constitute a quorum for purposes of the Meeting. Directors are elected by a
plurality vote and approval of all other matters presented at the Meeting
requires the affirmative vote of a majority of the votes cast by shareholders
present, in person or by proxy, at the Meeting. Votes withheld and abstentions
will be counted in determining the presence of a quorum, but will not be voted
and will have no effect on matters to be voted at the Meeting. Broker non-votes
will not be counted as votes cast on a proposal and will have no effect on
matters to be voted upon.
A form of proxy is enclosed for use at the Meeting. Proxies will be voted
in accordance with shareholders' instructions. If no instructions are indicated
on the proxy, all shares represented by valid proxies received pursuant to the
solicitation (and not revoked before they are voted) will be voted FOR the
election of the nominees named below as directors, and FOR the ratification of
the appointment of Arthur Andersen LLP as independent accountants to examine the
financial statements of the Company for the year ending December 31, 1999, and
by the proxies in their discretion on any other matters to come before the
Meeting. Any proxy given may, however, be revoked by the shareholder executing
it at any time before it is voted by a later dated proxy, written revocation
sent
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to the Secretary of the Company or attendance at the Meeting and voting in
person.
The cost of solicitation of proxies by the Board of Directors of the
Company (the "Board") will be borne by the Company. Proxies may be solicited by
mail, personal interview, telephone or telegraph and, in addition, directors,
officers and regular employees of the Company may solicit proxies by such
methods without additional remuneration. In addition, the Company has retained
W.F. Doring & Co. to aid in the solicitation of proxies for which a fee of
approximately $7,000, plus expenses, will be paid. Banks, brokerage houses and
other institutions, nominees or fiduciaries will be requested to forward the
proxy materials to beneficial owners in order to solicit authorizations for the
execution of proxies. The Company will, upon request, reimburse such banks,
brokerage houses and other institutions, nominees and fiduciaries for their
expenses in forwarding such proxy materials to the beneficial owners of the
Company's Common Stock.
ELECTION OF DIRECTORS
(Proposal 1)
The Board presently consists of six members, divided into three classes
each having a term of three years. The Board has nominated two current directors
for election at the Meeting for a term expiring at the year 2002 Annual Meeting
of Shareholders and until their successors are elected and qualified. Unless
authority to vote for the nominees is withheld in the proxy, the persons named
in the accompanying proxy intend to vote the shares represented by the proxy FOR
the election as director of the nominees named below. Although the Board does
not contemplate that either of the named nominees will be unavailable for
election, in the event a vacancy occurs, it is presently intended that the proxy
will be voted for the election of a nominee who shall be designated by the
Board. Four incumbent directors will continue to serve as directors following
the Meeting as set forth below, with two directors having a term expiring at the
year 2000 Annual Meeting of Shareholders and two directors having a term
expiring at the 2001 Annual Meeting of Shareholders.
The following biographical information is furnished as to the nominees for
election as a director and each of the current directors:
Nominees for Election to the Board of Directors
Three Year Term Expiring at 2002 Annual Meeting
HARRY G. CAMPAGNA, 60, Chairman of the Board, has been a director of the
Company since April 1994. Mr. Campagna has been the
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President, Chief Executive Officer and Chairman of the Board of Qualitex
Co. for more than the past five years. Qualitex is a manufacturer of press pads
and related items for the garment, apparel and textile industries.
STEVEN T. CLONTZ, 48, became a director of the Company in April 1998. In
January 1999 Mr. Clontz became President and Chief Executive Officer of StarHub
Pte., Ltd., which was recently awarded a full telecommunications wireline and
wireless carrier license in Singapore. He was President and Chief Executive
Officer of IPC Information Systems, Inc., an AMEX listed company headquartered
in New York which develops, manufactures and sells specialized
telecommunications products and services to the financial trading industry, and
served on the Board of Directors of IPC Information Systems from December 1995
to December 1998. Mr. Clontz was employed at BellSouth International, Inc. from
September 1987 to December 1995 where from July 1992 he served as President,
Asia Pacific Region, directing business development and investments in that
region.
Members of the Board of Directors Continuing in Office
Three Year Term Expiring at 2001 Annual Meeting
ROBERT S. ROATH, 56, has been a director of the Company since May 1997. Mr.
Roath was Chief Financial Officer and Senior Vice President of RJR Nabisco Inc.
from April 1995 to April 1997 and Corporate Controller and Senior Vice President
at RJR Nabisco from September 1990 to April 1995. Mr. Roath has been a part-time
consultant and Chairman of the Advisory Board to L.E.K. Consulting, a
shareholder value consulting firm, since May 1997. Mr. Roath is also a member of
the Advisory Board to the Roundabout Theatre, a New York City not-for-profit
classic theater and winner of six Tony Awards in 1998 and is a member of the
advisory board of the Robert H. Smith School of Business at University of
Maryland.
JOSEPH S. COLSON, JR., 51, became a director of the Company in April 1998.
Mr. Colson has been President of Colson Consulting, Inc., a private consulting
firm located in Cary, North Carolina since July 1998. He retired as President of
International Regions & Professional Services at Lucent Technologies, Inc. in
April 1998, where he was responsible for sales of network systems products and
services to global service providers since June 1997. He served as President of
the AT&T Customer Business Unit at Lucent from January 1996 to June 1997 and as
President of the AT&T Affiliates unit (renamed Communications Services
Applications) of Network Systems from April 1993 to January 1996. Mr. Colson is
on the Board of Trustees of North Carolina A&T State University, the Board of
Visitors at North Carolina State University, his alma mater, and is a director
of Crescent State Bank.
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Members of the Board of Directors Continuing in Office
Three Year Term Expiring at 2000 Annual Meeting
D. RIDGELY BOLGIANO, 66, has been a director of the Company since 1981. He
has been a Vice President and Chief Scientist of the Company since April 1984,
and has served as Chairman of the Board and Executive Vice President of
InterDigital Patents Corporation ("IPC") and InterDigital Technology Corporation
("ITC"), the Company's wholly-owned subsidiaries, from May 1996 to October 1998.
He has been affiliated with the Company in various capacities since 1974.
WILLIAM A. DOYLE, 50, became a director in May 1996. He has served as
President of the Company since November 1994. He was Executive Vice President,
Chief Administrative Officer, General Counsel and Secretary of the Company from
February 1994 to November 1994 and served as Vice President, General Counsel and
Secretary of the Company from March 1991 to February 1994.
Committees and Meetings of
the Board of Directors
The Company's Board of Directors has an Audit Committee, a Compensation and
Stock Option Committee, a Finance and Investment Committee and a Nomination and
Search Committee.
The current members of the Audit Committee are Mr. Roath, Chairman, Mr.
Colson and Mr. Clontz. During 1998, the Audit Committee held two meetings. The
functions of the Audit Committee include the recommendation and selection of
independent accountants, the review of audit results, the review of related
party transactions and the evaluation of internal accounting procedures of the
Company.
The Company's Compensation and Stock Option Committee (the "Compensation
Committee") currently consists of Mr. Campagna, Chairman and Mr. Roath. The
Compensation Committee held two meetings in 1998. Its responsibilities include
making recommendations to the full Board concerning compensation, bonus awards
and similar matters and granting awards under stock option plans of the Company.
The Company's Nomination and Search Committee consists of Mr. Campagna,
Chairman, Mr. Clontz, Mr. Doyle and Mr. Roath. The Nomination and Search
Committee held one meeting in 1998. Its functions include reviewing and making
recommendations to the full Board concerning nominees for directors. Although
the Nomination and Search Committee will consider nominees recommended by
shareholders, there are no formal procedures for such recommendations.
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The Board met five times during 1998. During 1998, each of the above
incumbent directors attended at least 75% of the meetings of the Board and the
committees on which they serve.
Compensation of Directors
Under the Company's 1997 Stock Option Plan for Outside Directors (the "1997
Plan") each member of the Board who is not an officer or employee of the Company
(an "Outside Director")is entitled to receive an annual grant of non-qualified
stock options to purchase shares of Common Stock at an exercise price equal to
the fair market value of the Common Stock on the date of grant. The grant is
automatically made to each Outside Director upon the conclusion of the Company's
Annual Meeting of Shareholders in each year in an amount equal to 16,000
multiplied by the number of years remaining in his term as an Outside Director.
All non-discretionary options granted under the 1997 Plan vest annually on the
date of each year's Annual Meeting of Shareholders at the rate of 16,000 shares
of Common Stock per year commencing on the date of the Annual Meeting following
the Annual Meeting of Shareholders at which the options were granted. Prorated
option grants are made to persons who served for a partial year.
Outside Directors are also entitled to an annual monetary director fee of
$15,000 for a full calendar year of service ("Fee"). A pro rata portion of the
Fee is paid for service of less than a full year. Payment of the Fee may be, at
the election of each Director, made on January 15 of each year, quarterly or
deferred. Payment of the Fee for service in 1998 was deferred by two Outside
Directors. The Company also reimburses Outside Directors for certain expenses
incurred in attending Board and committee meetings and travel on behalf of the
Company.
In connection with his service as Chairman of the Board, Mr. Campagna was
also awarded a non-qualified stock option in 1998 to purchase 100,000 shares of
Common Stock (of which all are currently exercisable)at an exercise price of
$4.31, being equal to the fair market value on the date of grant.
Compliance with Section 16(a) of the
Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission and the American Stock Exchange initial reports of
ownership and
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reports of changes in ownership of Common Stock and other equity securities
of the Company. Executive officers, directors and greater than ten percent
shareholders (collectively, "Reporting Persons") are additionally required to
furnish the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations of Reporting
Persons that no other reports were required with respect to fiscal 1998, all
Section 16(a) filing requirements applicable to the Reporting Persons were
complied with except as to Messrs. Merritt and Colson who each made one late
filing.
-------------------
Under the rules of the Securities and Exchange Commission (the
"Commission"), the Compensation Committee Report on Executive Compensation below
and the Shareholder Return Performance Graph appearing on page 13 of this Proxy
Statement are not to be deemed to be "soliciting material" or to be "filed" with
the Commission, or to be subject to certain of the proxy rules or to the
liabilities of Section 18 of the Securities Exchange Act of 1934 (the "Exchange
Act"), except to the extent that the Company specifically requests that such
information be treated as "soliciting material" or specifically incorporates it
by reference into a filing under the Securities Act of 1933 (the "Securities
Act") or the Exchange Act. Notwithstanding anything to the contrary set forth in
any of the Company's previous filings under the Securities Act or the Exchange
Act that might incorporate future filings, including this proxy statement, in
whole or in part, the Compensation Committee Report and the Shareholder Return
Performance Graph shall not be incorporated by reference in such filings.
Executive Compensation
Compensation Committee Report on Executive Compensation
General
The Company's Stock Option and Compensation Committee (the "Committee") has
overall responsibility for the implementation of executive compensation and
benefit programs of the Company. The
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Committee's primary responsibilities include: adopting compensation plans,
making recommendations to the Board as to annual salary, bonus and other direct
or indirect benefits of executive officers and other members of management, and
administering Company stock option plans including the grant of awards under
such plans to all eligible employees.
Compensation Philosophy
One of the most important duties of this Committee is to determine the
compensation of the Company's executive officers and one of its important goals
is to ensure that shareholder value is positioned as a primary driver and
motivator of executives. Accordingly, the Committee's philosophy is to ensure
that the Company's executive compensation is shareholder focused, appropriate,
competitive and in compliance with its independent oversight responsibilities.
In determining the amount and composition of executive compensation for the
Named Officers, the Committee is guided by the following objectives: to assist
the Company to attract and retain qualified executives in a highly competitive
industry; to reward executives consistent with the Company's performance; to
recognize individual performance and responsibility; to strengthen the mutuality
of interest between executives and the Company's shareholders; and to drive
long-term performance. The principal elements of executive compensation are:
base salaries, annual incentive compensation and long-term stock-based
compensation. Executive benefits and perquisites have not historically been a
significant component of InterDigital's executive compensation, although as part
of its overall strategy the Committee is focused upon enhancing and ensuring the
health, welfare and retirement needs of executives.
While the Company recently announced its intention to search for a new
Chief Executive Officer, since the Company did not have a Chief Executive
Officer during 1998 this report is limited to compensation of the Company's
other executive officers.
Base Salary
The Company's policy is to set base salaries for each executive officer
position in the upper middle range of scales for equivalent jobs with other
similarly situated industrial employers. Annual base salaries are reviewed from
time to time with the assistance of outside compensation consultants and
available statistics.
In 1998 the Company used the services of The Hay Group to monitor the
Company's competitive compensation status, and to
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recommend salary ranges and compensation changes to the Committee. Based on
data provided by The Hay Group, executive salaries were increased in 1998 (the
last annual compensation adjustment had taken place in 1996) to bring them into
line with competitive levels.
Annual Performance-Based Compensation
Awards of annual incentive performance-based compensation has historically
been based on a combination of (1) corporate goals including financial,
non-financial and strategic initiatives, (2) operating business
unit/departmental area goals, and (3) individual contribution goals. Most or all
of an executive's annual performance based awards can be primarily based on
overall corporate wide performance, if deemed appropriate.
While the Company did not have a formal bonus plan in place in 1998, the
Company elected to pay annual performance based awards to executives in amounts
equal to a varying percentage of their salaries (50% of salary in the case of
the President and 40% of salary in the case of the other Named Officers)due to
the Company's strong financial performance. The ranges of these awards were
based on recommendations of The Hay Group report. In addition to such percentage
based cash bonuses, special one-time bonuses were awarded to certain executives
(including one Named Officer) for their extraordinary contribution to achieving
patent licensing successes.
During 1998 The Hay Group was engaged to re-assess the competitiveness of
InterDigital's executive compensation program for select senior level positions
(including the Named Officers) and to provide recommendations for modifying the
program to ensure the Company could attract, motivate and retain appropriate
personnel to key positions in the Company. Accordingly, the adoption of an
executive bonus plan is now under consideration.
Equity Incentives
Stock options are utilized as future-oriented incentives. Their value is
derived from increases in the Company's stock value. In the case of both
incentive options and non-qualified options granted at 100% of fair market
value, the options will have no value unless the Company's stock price increases
following the grant date. All incentive stock options and non-qualified stock
options, except those issued in lieu of other forms of expressly agreed
compensation to conserve cash, have been granted at 100% of the fair market
value at the date of grant. Stock options (other than non-qualified options
which are performance-based or issued in lieu of other forms of compensation not
otherwise immediately payable) generally vest over three years and expire ten
years from the date of grant.
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In 1998, the Committee relied less on the grant of stock options as a major
component of executive compensation. The sole Named Officer to receive stock
options was granted them in connection with a promotion and in conjunction with
the filing and granting of patent applications pursuant to the Company's stock
option award policy for inventors.
The Committee intends to reconsider its policies from time to time and
revise its policies in accordance with the Company's then present performance,
competitive position, market for the Company's products and the Company's
available financial resources and any other considerations it deems appropriate.
COMPENSATION AND STOCK OPTION COMMITTEE:
Harry G. Campagna
Robert S. Roath
April 10, 1999
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Summary Compensation Table
The following table sets forth certain information concerning the annual
and long-term compensation paid to or for (i) the Company's President who acted
in a similar capacity to a Chief Executive Officer during the fiscal year ended
December 31, 1998, (ii) the Company's four most highly compensated other
executive officers whose total annual salary and bonus exceeded $100,000 in 1998
(collectively, the "Named Officers"), for services rendered to the Company and
its subsidiaries during fiscal years 1996, 1997 and 1998.
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
------------------- ---------------
Other Securities
Name and Annual Underlying All Other
Principal Salary Compensation Options Compensation
Position Year ($) Bonus(1) ($)(2) /SARs(#) (3)
- -------- ---- ------ -------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
William A. Doyle 1998 $238,333 $119,167 $0 0 $2,510
President 1997 $220,000 $0 $0 200,000 $2,432
1996 $186,667 $0 $0 40,000 $ 800
Howard E. Goldberg 1998 $206,667 $180,000 $0 0 $3,419
Executive Vice President, 1997 $190,000 $0 $0 75,000 $3,905
President of InterDigital 1996 $146,667 $0 $160,000(5) 30,000 $ 979
Patents Corporation (4)
Mark Lemmo 1998 $183,333 $ 73,333 $0 0 $1,983
Executive Vice President 1997 $170,000 $0 $222,522(6) 136,500 $2,175
1996 $140,000 $0 $ 75,000(5) 30,000 $ 211
Gary Lomp 1998 $176,666 $ 70,666 $0 36,000 $ 439
Executive Vice President(7) 1997 $170,000 $0 $0 49,500 $ 418
1996 $140,000 $0 $50,000(5) 39,000 $ 211
Charles R. Tilden 1998 $180,000 $ 72,000 $0 0 $3,292
Executive Vice President(8) 1997 $155,000 $0 $0 75,000 $1,534
1996 $ 19,374 $0 $0 90,000 $ 0
</TABLE>
- ----------------------
(1) Amounts listed as bonuses for fiscal 1998 were accrued but not paid until
1999 for each Named Officer.
(2) As permitted by rules established by the Commission, no amounts are shown
with respect to certain 'perquisites' where such amounts do not exceed the
lesser of 10% of bonus plus salary or $50,000.
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(3) Amounts listed under "All Other Compensation" for 1998 represent the dollar
value of insurance premiums with respect to term life insurance (Doyle
$998; Goldberg $1,526; Lemmo $459; Lomp $439; Tilden $792), 401-K matching
(Doyle $1,512; Goldberg $1,893; Lemmo $1,524; Tilden $2,500.)
(4) Mr. Goldberg also served as General Counsel and Secretary until October
1998 when he was named President of InterDigital Patents Corporation.
(5) Amount listed represents commissions related to a transaction completed in
1996.
(6) Amount listed represents commissions related to various transactions
completed in 1996 but not paid until 1997 and a transaction completed in
1997.
(7) Mr. Lomp became an Executive Vice President of the Company in June 1998.
(8) Mr. Tilden joined the Company as a Vice President in October 1996 and
became Executive Vice President effective January 1998.
Each of Messrs. Doyle, Goldberg, Lemmo, and Tilden have entered into
employment agreements with the Company (the "Employment Agreements")that provide
severance pay benefits, among other things, in certain events of termination of
employment. The Employment Agreements generally provide that the Company may
enforce up to a one year covenant not to compete by paying severance of up to
one year's salary and one year's continuation of medical and dental benefits
during which time the individual is subject to non-compete provisions. The
Employment Agreements also provide a one year covenant-not-to-compete without
payment of severance following termination by the Company for "cause", as
defined in the Agreements. In addition, in the event of a termination within one
year after a change of control, which is defined as the acquisition, including
by merger or consolidation, or by the issuance by the Company of its securities,
by one or more persons in one transaction or a series of related transactions,
of more than fifty percent of the voting power represented by the outstanding
stock of the Company, the employee would generally receive two years salary and
the immediate vesting of all stock options.
The Employment Agreements (executed between October 1996 and May 1997)
provide for the payment by the Company of annual salaries to said Executive
Officers which may be increased from time to time. Current salaries paid
pursuant to the Employment Agreements are: Doyle $275,000; Goldberg $240,000;
Lemmo $210,000; and Tilden, $190,000.
Stock Option Grants, Exercises and Holdings
The following tables set forth certain information concerning stock options
granted to and exercised by the Named Officers during fiscal 1998 and
unexercised stock options held by them at the end of fiscal 1998.
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<TABLE>
<CAPTION>
Options/SARs Grants in Last Fiscal Year
Individual Grants
---------------------
Number of
Securities % of Total
Underlying Options/SARs Potential Realizable
Options/ Granted to Value at Assumed Annual Rates Of
SARs Granted Employees in Last Exercise or Expiration Stock Price Appreciation for Option
Name (#) Fiscal Year Base Price Date Term(1)
---- ------------ ----------------- ----------- ---------- -----------------------------------
5% 10%
----- ----
<S> <C> <C> <C> <C>
William A. Doyle 0 0 - - 0 0
Howard E. Goldberg 0 0 - - 0 0
Mark Lemmo 0 0 - - 0 0
Charles R. Tilden 0 0 - - 0 0
Gary Lomp 1,500 0.3% $3.25 (2) $- $-
30,000 5.9% $5.6875 06/16/08 $107,305 $271,932
4,500 0.9% $4.875 10/27/08 $ 13,796 $ 34,963
</TABLE>
- -----------
(1) Potential Realizable Value is reported net of the option exercise price,
but before taxes associated with the exercise. These amounts represent
certain assumed rates of appreciation only. Actual gains, if any, on stock
option exercises are dependent upon the future performance of the Company's
Common Stock. The amounts reflected in this table may not necessarily be
achieved.
(2) These options were exercised in full during 1998.
Aggregated Option/SAR Exercises in Last Fiscal Year
And FY-End Option/SAR Values
<TABLE>
<CAPTION>
Number of Securities
Underlying Value of Unexercised
Shares Options/SAR's In-the-Money Options/SAR's
Acquired On Value at FY-End (#) at FY-End ($)(1)
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William A. Doyle..... 0 $0 291,666 106,668 $72,709 $0
Howard E. Goldberg... 0 $0 227,500 42,500 $45,000 $0
Mark Lemmo........... 0 $0 152,000 62,500 $ 281 $0
Gary Lomp............ 52,000 $307,825 162,000 52,500 $0 $0
Charles R. Tilden.... 0 $0 97,500 67,500 $0 $0
</TABLE>
- ----------------
(1) The values of unexercised, in-the-money options are calculated by
subtracting the exercise price from the fair market value of the shares of
Common Stock underlying the options at December 31, 1998.
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Shareholder Return Performance Graph
The following graph compares for years 1994 through 1998 the yearly change
in the cumulative total return to holders of the Company's Common Stock with the
cumulative total return of the CRSP Index for AMEX Stock Market United States
Companies (the "AMEX Index") and the industry group consisting of twenty-six
AMEX listed, United States companies classified under the same first three
digits as the Company's Standard Industry Classification, as compiled by the
Center for Research in Security Prices, The University of Chicago, Graduate
School of Business (the "Published Industry Group Index").
In the printed version there appears a line graph
with the following plot points depicted:
12/1993 12/1994 12/1995 12/1996 12/1997 12/1998
------- ------- ------- ------- ------- -------
InterDigital
Communications
Corporation 100.0 140.5 275.2 221.6 114.3 170.3
AMEX Stock
Market (US
Companies) 100.0 93.3 120.0 121.9 252.5 162.8
AMEX Stocks
Communications
Equipment 100.0 106.0 189.5 145.0 124.4 122.0
The above graph assumes that the value of the investment in InterDigital
Communications Corporation, the AMEX Index companies and the Published Industry
Group Index companies was $100 at the market close on December 31, 1993 (the
last trading day in 1993), and that all dividends paid by companies included in
the AMEX Index and the Published Industry Group Index were reinvested. During
this period the Company has not declared or paid any dividends on its Common
Stock.
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Security Ownership Of
Certain Beneficial Owners
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock, as of January 21, 1999 by each person
known to the Company to be the beneficial owner of more than 5% of any class of
the Company's outstanding Common Stock. The following information is based
solely upon such shareholder's Schedule 13G, Amendment No.3, dated January 21,
1999, as filed with the Securities and Exchange Commission.
Name and Address of Amount and Percent of
Beneficial Nature of Common Stock
Owner Ownership (1) Outstanding
- ------------------- ------------ -------------
Heartland Advisors, Inc............. 8,654,600 17.9%
790 North Milwaukee Street
Milwaukee WI 53202
- -----------
(1) Heartland Advisors, Inc. has sole voting and dispositive power as to
3,851,800 shares and sole dispositive, but no voting power as to 4,802,800
shares. All of such shares are held in various investment advisory accounts
of Heartland Investors. The interests of one such account, Heartland Value
Fund, a series of Heartland Group. Inc., a registered investment company,
relate to more than 5% of the class.
Security Ownership Of Management
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock, as of April 1, 1999, by each of the
Company's directors, by each of the Named Officers, and by all executive
officers and directors of the Company as a group. Unless otherwise indicated,
the shareholders listed possess sole voting and investment power with respect to
the shares listed.
Percent of Common
Amount and Stock Outstanding
Name of Nature of (if greater
Beneficial Owner Ownership(1) than 1%) (2)
- ----------------- ------------ ------------
D. Ridgely Bolgiano......... 352,077 --
Harry G. Campagna........... 592,723(3) 1.2%
Joseph S. Colson, Jr........ 4,448 --
Steven T. Clontz............ 5,448 --
William A. Doyle............ 295,567 --
Howard E. Goldberg.......... 231,305(3) --
Mark Lemmo.................. 154,699 --
Robert S. Roath............. 43,616 --
Charles R. Tilden........... 113,990 --
Gary Lomp................... 172,278 --
All directors and officers
as a group (13 persons)... 2,112,323(3) 4.2%
14
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- ----------
(1) Includes the following number of shares of Common Stock which may be
acquired by the persons and group identified in the table (or members of
the immediate family or other persons or entities affiliated with such
persons or members of such group), through the exercise of options or
warrants which were exercisable as of April 1, 1999 or will become
exercisable within 60 days of such date: Mr. Bolgiano, 252,050; Mr.
Campagna, 512,723; Mr. Colson, 2,448; Mr. Clontz, 2,448; Mr. Doyle,
291,666; Mr. Goldberg, 227,500; Mr. Lemmo, 153,500; Mr. Roath, 39,616; Mr.
Tilden, 112,500; Mr. Lomp, 165,000; all directors and executive officers as
a group, 1,741,784.
(2) Based upon 48,516,718 shares of Common Stock issued and outstanding at
April 1, 1999.
(3) Investment and voting power with respect to certain of such securities may
be shared with members of the immediate family or other persons or entities
affiliated with the listed person or members of the listed group.
Compensation Committee Interlocks
and Insider Participation
During 1998 the following directors served on the Compensation and Stock
Option Committee of the Board: Mr. Campagna and Mr. Roath. None of the
aforementioned Committee members was an officer or employee of the Company or
any of its subsidiaries during 1998, or was formerly an officer of the Company
or any of its subsidiaries.
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
(Proposal 2)
The Board of Directors of the Company has appointed Arthur Andersen LLP as
independent public accountants to examine the financial statements of the
Company for the year ending December 31, 1999. Arthur Andersen LLP has served as
accountants for the Company since 1982. Representatives of Arthur Andersen LLP
will be present at the meeting to make a statement if they desire to do so and
to respond to appropriate questions.
To be ratified, the appointment must be approved by a majority of the votes
cast by all holders of the Common Stock present, in person or by proxy, and
entitled to vote at the meeting.
Although the submission of the appointment of Arthur Andersen LLP is not
required by law or the By-Laws of the Company, the Board is submitting it to the
shareholders to ascertain their views. If the shareholders do not ratify the
appointment, the Board will not be bound to seek other independent accountants
for 1999, but the selection of other independent accountants will be considered
in future years.
The Board recommends a vote FOR Proposal 2 to ratify the appointment of
Arthur Andersen LLP.
15
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SHAREHOLDER PROPOSALS
To be eligible for inclusion in the Company's proxy materials for the 2000
Annual Meeting of Shareholders, a proposal intended to be presented by a
stockholder for action at that meeting must, in addition to meeting the
stockholder eligibility requirements of the Securities and Exchange Commission's
rules governing such proposals, be received not later than January 1, 2000 by
the Secretary of the Company at the Company's principal executive offices, 781
Third Avenue, King of Prussia, PA 19406-1409. The execution of a proxy solicited
by the Company in connection with its 2000 Annual Meeting of Stockholders shall
confer on the designated proxyholders discretionary voting authority to vote on
any matter for which the Company has not received notice on or prior to March 6,
2000.
OTHER MATTERS
As of the date of this Proxy Statement, the Company does not intend to
present and has not been informed that any other person intends to present any
appropriate business not specified in this Proxy Statement for action at the
Meeting. However, if other matters should properly come before the meeting or
any adjournment thereof, it is the intention of the persons named in the
accompanying proxy, or their substitutes, to vote the proxy in accordance with
their judgment in such matters.
THE COMPANY HAS PROVIDED TO EACH PERSON SOLICITED, A COPY OF ITS ANNUAL
REPORT ON FORM 10-K INCLUDING THE FINANCIAL STATEMENTS AND FINANCIAL STATEMENT
SCHEDULES, BUT EXCLUDING EXHIBITS, AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998. REQUESTS FOR EXHIBITS,
FOR WHICH THE COMPANY WILL IMPOSE A CHARGE, SHOULD BE DIRECTED IN WRITING TO
WILLIAM J. MERRITT, SECRETARY, INTERDIGITAL COMMUNICATIONS CORPORATION, 781
THIRD AVENUE, KING OF PRUSSIA, PENNSYLVANIA 19406-1409.
By Order of the Board of Directors
/s/ William J. Merritt
----------------------------------
William J. Merritt, Secretary
King of Prussia, Pennsylvania
April 30, 1999
16
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INTERDIGITAL COMMUNICATIONS CORPORATION
Proxy Solicited On Behalf Of The Board of Directors
The undersigned, revoking all previous proxies, hereby appoints William A.
Doyle, Howard E. Goldberg and William J. Merritt, and each of them acting
individually, as the attorney and proxy of the undersigned, with full power of
substitution, to vote, as indicated on the reverse side of this proxy card and
in their discretion upon such other matters as may properly come before the
meeting, all shares which the undersigned would be entitled to vote at the
Annual Meeting of the Company to be held on June 3, 1999, and at any adjournment
or postponement thereof.
Please date and sign your Proxy on the reverse side and return it promptly.
<PAGE>
1. Election of Directors:
_____ For the nominees _____ Withhold Authority to vote for
listed below the nominees listed below
Nominees: For a three-year term expiring at the year 2002 Annual
Meeting: Harry G. Campagna and Steven T. Clontz
(Instruction: To withhold authority to vote for any individual
nominee, write that nominee's name on the line below:)
-----------------------------
2. Ratification of Arthur Andersen LLP as independent accountants for the
year ending December 31, 1999:
_____ For _____ Against _____ Abstain
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. UNLESS
OTHERWISE SPECIFIED, THE SHARES WILL BE VOTED "FOR" THE ELECTION OF THE NOMINEES
FOR DIRECTOR LISTED ABOVE, AND "FOR" RATIFICATION OF APPOINTMENT OF ARTHUR
ANDERSEN LLP AS THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS. THIS PROXY ALSO
DELEGATES DISCRETIONARY AUTHORITY WITH RESPECT TO ANY OTHER BUSINESS WHICH MAY
PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL
MEETING, PROXY STATEMENT AND ANNUAL REPORT.
Date: , 1999
-----------------
- --------------------------------------------------
Signature of Shareholder
- --------------------------------------------------
Signature of Shareholder
NOTE: PLEASE SIGN THIS PROXY EXACTLY AS NAME(S) APPEAR ON YOUR STOCK
CERTIFICATE. WHEN SIGNING AS ATTORNEY-IN-FACT, EXECUTOR, ADMINISTRATOR, TRUSTEE
OR GUARDIAN, PLEASE ADD YOUR TITLE AS SUCH, AND IF SIGNER IS A CORPORATION,
PLEASE SIGN WITH FULL CORPORATE NAME BY A DULY AUTHORIZED OFFICER OR OFFICERS
AND AFFIX THE CORPORATE SEAL. WHERE STOCK IS ISSUED IN THE NAME OF TWO (2) OR
MORE PERSONS, ALL SUCH PERSONS SHOULD SIGN.
