Confident Rubric’s Nominees Outmatch Xperi’s
Incumbent Directors in Areas Critical to the Company’s Success,
Including Capital Allocation, Cost Discipline, and Technology
Product-Market Fit Expertise
Believes David Habiger and Darcy Antonellis
Have Overseen Substantial Stockholder Value Destruction,
Architected Xperi’s Excessive and Misaligned Compensation Scheme,
and are Ill-Equipped to Address the Challenges Facing the
Company
Urges Stockholders to Vote FOR Rubric’s Nominees Thomas A. Lacey and Deborah
S. Conrad on the WHITE Proxy
Card
Rubric Capital Management LP (“Rubric”), an investment advisor
whose managed funds and accounts collectively own approximately
9.0% of the outstanding shares of common stock of Xperi Inc. (NYSE:
XPER) (“Xperi” or the “Company”), today sent a letter to Xperi
stockholders urging them to replace David Habiger and Darcy
Antonellis as members of the Company’s Board of Directors with
Rubric’s nominees, Thomas A. Lacey and Deborah S. Conrad, at
Xperi’s Annual Meeting of Stockholders, which is scheduled to be
held on May 24, 2024.
In its letter, Rubric underscored Xperi’s and its predecessor
company’s poor total shareholder return under the watch of Mr.
Habiger and Ms. Antonellis, and contrasted the superior
qualifications, skills, and track records of Mr. Lacey and Ms.
Conrad with those of the incumbent directors.
The full text of the letter follows:
May 8, 2024
Dear Fellow Stockholder:
Rubric Capital Management LP (“Rubric”) manages funds and
accounts which collectively own approximately 9.0% of the
outstanding shares of common stock of Xperi Inc. (“Xperi” or the
“Company”), making us the Company’s third largest stockholder (and
largest non-index holder by a wide margin). We have patiently been
stockholders of Xperi and its predecessors since Rubric’s formation
in 2016, but we cannot standby idly any longer while the value of
our investment continues to deteriorate.
For far too long, Xperi stockholders have suffered at the hands
of the current Board of Directors (the “Board”). Across the
duration of Xperi’s existence as a standalone company, the
Company’s share price has significantly underperformed its peers
and comparable benchmarks, revenue growth and margins have
continually missed stated goals and the Company’s capital
allocation strategy has failed to generate any meaningful economic
returns. All the while, Company executives have benefitted
handsomely from an utterly out-of-sync compensation program that is
not tethered to performance and has severely diluted
stockholders.
Do not be fooled by Xperi’s recent attempts to present a
falsified version of its share performance and dilution to
stockholders. The facts are the facts: since the spin-off in 2022, Xperi has generated a TSR of
nearly -34% while stock-based compensation has increased
dramatically, further siphoning the Company from
investors.1
As long-term investors in Xperi and its predecessors, we see a
path forward where the sins of the past can be reversed and
stockholders can finally see value for their investment. However,
time is of the essence. If the status quo remains, we
believe that Xperi will fail to capitalize upon its potential and
stockholders will continue to see the value of their investment
decline.
We have nominated two highly qualified, independent directors to
the Board – Thomas A. Lacey and Deborah S. Conrad – who have strong
track records of driving stockholder value creation, deep
financial, corporate strategy, marketing and turnaround expertise,
and are committed to restoring accountability in the boardroom.
We are confident that these individuals
will bring a clear, achievable plan to create meaningful long-term
value at Xperi, and if elected, will immediately seek to undertake
a proper evaluation of Xperi’s Perceive business, reduce excessive
costs and overhaul executive compensation to align pay with
performance and incentivize operational excellence.
We urge you to replace David Habiger and Darcy Antonellis as
Xperi directors with Rubric’s nominees, Thomas A. Lacey and Deborah
S. Conrad, by voting the WHITE proxy card TODAY.
WE BELIEVE ENTRENCHED XPERI DIRECTORS DAVID
HABIGER AND DARCY ANTONELLIS EMBODY THE LACK OF ACCOUNTABILITY THAT
HAS HARMED STOCKHOLDERS AND ARE ILL-EQUIPPED TO ADDRESS THE
CHALLENGES FACING THE COMPANY
When it comes to the issues plaguing the Company and
contributing to its stark underperformance – accountability,
executive compensation and capital allocation – we believe
incumbent directors David Habiger and Darcy Antonellis bear much of
the blame.
David Habiger has been a director of Xperi and its
predecessor companies since 2014. He has presided over a total
shareholder return (“TSR”) of nearly -34% since Xperi’s
spin-off in 2022 and over -57% at Xperi’s predecessor.2 As
Chairman of the Board, responsibility for Xperi’s consistent
underperformance and ineffective oversight lies squarely at his
feet.
Moreover, Mr. Habiger has been a member of the Board’s
Compensation Committee for eight years,3 and has been setting CEO
Jon Kirchner’s compensation for nearly a decade, dating back to
their time together at DTS, Inc. (“DTS”), a company which Xperi
acquired in 2016. We have to ask, is Mr. Habiger loyal to Xperi
stockholders, or is he more focused on further enriching his
longtime colleague, Mr. Kirchner? In our view, the evidence
suggests the latter.
Mr. Habiger also holds numerous positions outside of his role on
the Xperi Board – including actively serving as CEO of another
company as well as a member of multiple other public and private
boards – calling into question his ability to dedicate sufficient
time to Xperi. We are not the first to raise concerns about Mr.
Habiger’s juggling act. In 2017, while serving as a director of
Xperi’s predecessor, Mr. Habiger did not receive a majority of
votes cast in favor of his election after leading proxy advisory
firms Institutional Shareholder Services Inc. (“ISS”) and Glass
Lewis issued negative voting recommendations with respect to his
election, citing the number of boards of directors on which he
served. Mr. Habiger was forced to tender his resignation to the
predecessor’s board, which the board proceeded not to accept in a
blatant disregard for the will of stockholders. At this year’s
election, stockholders cannot, and will not, be ignored.
Darcy Antonellis, for her part, has been a director of
Xperi and its predecessor companies since 2018. She has presided
over a TSR of nearly -34% since Xperi’s spin-off in 2022 and
nearly -11% at Xperi’s predecessor.4 Troublingly, her track
record of stockholder value destruction does not stop there. As a
director of Cinemark Holdings, Inc. and Bango plc (the only other
public boards she serves on), she has presided over a TSR of
approximately -49% and -35%, respectively.5
Like Mr. Habiger, Ms. Antonellis has served on the Board’s
Compensation Committee for several years, helping to foment the
culture of misaligned and excessive incentives that plague Xperi.
She is also Chair of the Board’s Nominating and Corporate
Governance Committee, which failed to meet the standards of leading
proxy advisory firm ISS last year, and which has refused to engage
constructively with Rubric to improve the Xperi Board.
Last, but certainly not least, it is abundantly clear to us that
Mr. Habiger and Ms. Antonellis are both woefully unequipped to
evaluate Perceive and recommend a plan of action to management,
seeing as neither of them possess the requisite semiconductor or
technology product-market fit expertise. To date, Perceive has been
a drag on Xperi’s performance, but through a sale or thoughtful
partnerships, we believe that its value as an AI enablement
technology can still be realized. Unfortunately, under Mr.
Habiger’s and Ms. Antonellis’ oversight, we have little hope that
this realization will ever occur.
RUBRIC’S NOMINEES ARE HIGHLY QUALIFIED AND
COMMITTED TO WORKING FOR STOCKHOLDERS
All hope is not lost. With proper stewards providing oversight
and direction to management, we are confident that Xperi can right
its wrongs and deliver meaningful long-term value to stockholders.
Our nominees possess relevant expertise, capital allocation rigor
and believe in the primacy of stockholder returns – all qualities
that we believe are woefully lacking on the Board today.
Thomas A. Lacey is a veteran public company executive
with deep financial and turnaround expertise. He is an experienced
change agent who has repeatedly demonstrated an ability to address
the challenges of underperforming technology companies – including
Xperi’s predecessor.
As our fellow stockholders may recall, Mr. Lacey was appointed
CEO of Xperi’s predecessor in 2013 to shut down money-losing
businesses, improve profitability and grow recurring revenue.
During his four-year tenure, he did just that. From 2013 to
2017, Mr. Lacey presided over a TSR of +67% and an increase in
recurring revenue of +140%.6 He was also one of the
principal architects of the transaction that created modern Xperi
through the acquisition of DTS. Simply put, Mr. Lacey was
effective then, and he knows the business, people and culture to be
immediately effective again.
Mr. Lacey oversaw similar turnarounds as a director at DSP
Group, Inc. (“DSPG”) and International Rectifier Corp. (“IRF”), two
technology companies which found themselves at similar inflection
points upon his joining their boards. During his multi-year tenures
on the boards of DSPG and IRF, he presided over TSRs of
+270% and +75%, respectively.7 Mr. Lacey’s stellar
track record of stockholder value creation speaks for itself and
stands in stark contrast to the track records of Mr. Habiger and
Ms. Antonellis. If elected to the Board, Mr. Lacey will work
tirelessly to create a culture grounded in open communication,
alignment, capital efficiency and a commitment to the best
interests of stockholders.
Deborah S. Conrad is a seasoned technology leader with
deep marketing and corporate strategy expertise. Ms. Conrad’s
experience makes her uniquely capable of addressing some of the
most pressing issues at Xperi: elucidating the value of Perceive
and identifying tech-enabled market opportunities.
Ms. Conrad previously worked for over 27 years at Intel
Corporation (“Intel”), where she held senior positions of
increasing responsibility across multiple areas, culminating in her
role as Corporate Vice President and Chief Marketing Officer, from
2008 to 2014. At Intel, she demonstrated a unique ability to map
novel technology to market opportunity, be it with the successful
launch of the company’s first server, data center and cloud
computing chip family, or by spearheading Intel’s entrance into the
mobile, embedded and Internet of Things categories. She was also
instrumental in forming lucrative product partnerships at Intel,
leading the company’s first-ever partnership with Apple Inc., which
scaled to $1 billion in revenue in 18 months, and in driving
improved financial performance, including delivering an incremental
$4 billion in gross margin in only one year by overhauling
and simplifying Intel’s CPU product roadmap and brand strategy.
Since her time at Intel, Ms. Conrad has applied her skills in
finding product market fit for new technologies to the healthcare
industry, serving in numerous senior marketing roles at companies
developing novel products and platforms, including Hinge Health,
Inc., Vori Health Inc., NovaSignal Corp. and Included Health, LLC.
She has also held multiple private board directorships, where she
has consistently advocated for efficiency and accountability of
management.
THE CHOICE IS CLEAR: VOTE FOR THOMAS A.
LACEY AND DEBORAH S. CONRAD TO RESTORE ACCOUNTABILITY, ALIGNMENT
AND ACTION ON THE XPERI BOARD
Xperi’s Board has demonstrated a repeated unwillingness to take
any proactive steps to improve the Company unless and until forced,
resulting in substantial destruction of stockholder value. At
Xperi’s Annual Meeting of Stockholders scheduled to be held on May
24, 2024, you have the opportunity to take matters into your own
hands.
Vote for accountability. Vote for
alignment. Vote for action. Vote the WHITE
proxy card today FOR the election of Thomas A. Lacey and
Deborah S. Conrad to the Xperi Board.
Vote the WHITE
proxy card TODAY
If you have any questions, require
assistance in voting your WHITE proxy card, or need
additional copies of Rubric’s proxy materials, please contact our
proxy solicitor Okapi Partners at (855) 305-0856 or via email
at info@okapipartners.com.
Sincerely,
David Rosen Managing Partner Rubric Capital Management LP
1 Source: Bloomberg. Calculated as of April 26, 2024. 2 Source:
Bloomberg. Calculated as of April 26, 2024. 3 Note: service years
inclusive of with applicable predecessor company. 4 Source:
Bloomberg. Calculated as of April 26, 2024. 5 Source: Bloomberg.
Calculated as of April 26, 2024. 6 Source: Bloomberg; regulatory
filings of Xperi’s predecessor company. 7 Source: Bloomberg.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240507873064/en/
Media: Jonathan Gasthalter/Sam Fisher Gasthalter & Co. (212)
257-4170 Investors: Jason W. Alexander/Bruce H. Goldfarb Okapi
Partners LLC (212) 297-0720
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