Press Release

8/08/05 – Over 80% of this year’s IPOs (through July 15) included some component of cash compensation for independent directors. Only two-thirds (68.0%) had some form of equity. For our analysis we did not include reimbursement of directors’ out-of-pocket costs to attend meetings as cash compensation.

Year	Total No. of IPOs	% of IPOs Equity Only Comp.	% of IPOs Cash Only Comp.	% of IPOs With Both
2001	99	26.3%	24.2%	45.5%
2002	92	14.1%	30.4%	54.3%
2003	87	9.2%	13.8%	73.6%
2004	253	12.3%	10.7%	67.6%
2005*	106	3.8%	16.0%	64.2%

The real difference in this year’s percentages of IPOs including some form of cash over those packages including equity-based compensation is the dramatic drop in the percentage of IPOs which offered only equity compensation. The percentage of IPOs compensating independent directors with only equity dropped from over 12% last year to 3.8%.

Four IPOs this year disclosed that they would compensate independent directors solely using equity. Fusion Telecommunications International, Inc. (issue date 2/11/05), PRB Gas Transportation, Inc. (4/12/05), Allion Healthcare, Inc. (6/22/05), and HemoSense, Inc. (6/28/05) all granted options of various kinds to their independent directors. Allion went so far as to state that they “do not have a formal policy regarding compensation” of their directors, but disclosed that they awarded them options all the same.

A whopping 16% did not disclose how they intended to compensate their directors at time of the IPO or thereafter. This segment comprised all of the blank check companies, which until they have executed their acquisitions have no real business, plus a couple of additions. Those in the undisclosed compensation segment that were not blank check enterprises were Dollar Financial Corp. (1/27/05), GRAVITY Co., Ltd. (2/7/05), Prestige Brands Holdings, Inc. (2/9/05), and Builders FirstSource, Inc. (6/22/05). All but GRAVITY stated that they would set compensation plans for their independent directors, but did not specified in which form or combination thereof, or in what amounts. GRAVITY, however, did not include any disclosure in their final prospectus concerning independent directors’ compensation.

Eighty-five of the 109 IPOs through July 15^th this year had some form of cash compensation disclosed for their independent directors. A vast majority, over three-quarters (75.3% of the 85), disclosed a specific annual retainer payable to their independent directors.

The remaining quarter of those IPOs which disclosed the use of some form of cash compensation to independent directors but did not state a fixed retainer amount for all independent directors either

1) disclosed that cash would be part of the compensation but did not specify an amount;

3) gave no annual retainer but paid a specific amount per board or committee meeting attended;

5) would compensate at least partly in cash commensurate with other companies’ independent director compensation packages.

Range Of Annual Cash Comp.	High Offer Amt. ($mil)	Low Offer Amt. ($mil)	High Revenue ($mil)	Low Revenue ($mil)
$10,000 or Less	$106.0	$10.8	$323.2	$0.0
$10,001 to $20,000	$304.0	$15.0	$927.6	$0.0
$20,001 to 30,000	$560.5	$35.1	$1,163.9	$0.0
$30,001 to $50,000	$900.0	$8.9	$1,010.3	$8.9
$50,001 to $100,000	$720.0	$173.6	$1,474.7	$189.1
$100,001 & Greater*	$1,385.2	$386.0	$10,727.5	$155.8

© CCH INCORPORATED 2005. IPO Vital Signs includes all U.S. market IPOs, including REITs and non-U.S. headquartered IPO issuers, except for 1) closed-end funds; 2) best-efforts, self-underwritten, and direct offerings; and 3) IPOs filing under form SB-2 with an offering amount of less than $5 million. All fees are estimated and taken from Part II of the final amendment if not disclosed in the final prospectus.