Maintains that After Years of
Underperformance Both Before and After the Spin-Off, Incumbent
Directors David Habiger and Darcy Antonellis Cannot be Trusted to
Help Xperi Achieve its Goals and Deliver Value for
Stockholders
Presents a Clear and Actionable Plan to
Create Meaningful Value
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 reject the status quo of value
destruction under the current Board of Directors by replacing
incumbent directors David Habiger and Darcy Antonellis 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 also outlined a plan to restore and
rebuild stockholder value at Xperi, inclusive of the following,
readily accessible initiatives, which Rubric’s nominees are
prepared to execute:
- Restore Accountability
- Evaluate Perceive and Other Projects
- Reduce Excessive Costs
- Institute Pay-for-Performance
The full text of the letter follows:
May 16, 2024
Dear Fellow Stockholder,
Xperi Inc.’s (“Xperi” or the “Company”) 2024 Annual Meeting of
Stockholders (the “Annual Meeting”) scheduled to be held on May 24,
2024 is fast approaching. In just a few short days, stockholders
will cast a vote in favor of one of the following paths forward for
the Company:
A.
Renewed accountability and alignment on
the Xperi Board of Directors (the “Board”) and a clear plan to
create meaningful stockholder value.
B.
More of the status
quo – continued value destruction under a Board with a long history
of underperformance and poor decision making at the expense of
stockholders.
Rubric Capital Management LP (“Rubric”) has nominated two
highly-qualified, independent director candidates for election to
the Board – Thomas A. Lacey and Deborah S. Conrad – to shepherd the
Company along path A. Our director nominees, who include 1) the
former CEO of Xperi’s predecessor company during a period of
significant share price outperformance and 2) a proven expert in
commercializing technologies, possess the experience and skillsets
necessary to address the challenges facing the Company, and bring
with them an achievable plan to drive long-term value.
We urge you to vote FOR Rubric’s nominees, Thomas A.
Lacey and Deborah S. Conrad, on the WHITE proxy card
TODAY. We fear that without their addition to the Board,
stockholders will be left with more of the status quo – or
worse.
A VOTE FOR INCUMBENT DIRECTORS DAVID HABIGER
AND DARCY ANTONELLIS IS A VOTE FOR CONTINUED
UNDERPERFORMANCE
Over the course of our proxy contest, Xperi has presented
manipulated versions of its share performance to distract from the
truth, and the Board has relied upon what it has framed as the
relative recency of the Company’s spin-off in 2022 to skirt
accountability for Xperi’s significant underperformance. If given
more time, the Company will eventually execute on its long-term
strategic plan, and stockholders will finally see value for their
investment, the Board would have you believe. But what have the
incumbent directors accomplished to deserve more time? Consider
these irrefutable facts about Xperi’s pre- and post-spin-off
performance under incumbent directors David Habiger and Darcy
Antonellis:
- From the time Mr. Habiger joined the board of Xperi’s
predecessor company in 2016 until Xperi’s spin-off in 2022, he
presided over a total shareholder return (“TSR”) of -57.4%.1
- From the time Ms. Antonellis joined the board of Xperi’s
predecessor company in 2018 until Xperi’s spin-off in 2022, she
presided over a TSR of -10.6%.2
- Since the spin-off in 2022, during which period Mr. Habiger
and Ms. Antonellis have continued to serve as directors, Xperi has
generated a TSR of nearly –34%.3
- Mr. Habiger and Ms. Antonellis have presided over a combined
TSR of –71.7% and –40.6%, respectively, since joining the boards of
Xperi and its predecessor company.4
No matter how you slice it, Mr. Habiger and Ms. Antonellis have
overseen substantial stockholder value destruction. It is clear to
us that with the same directors serving on the boards of Xperi and
its predecessor company, stockholders have received the same poor
results. Allow us to reiterate: Same
directors. Same poor results.
RUBRIC HAS A CLEAR AND ACTIONABLE PLAN FOR
MEANINGFUL VALUE CREATION
We believe the persistent underperformance and culture of
mediocrity that Mr. Habiger and Ms. Antonellis have so dutifully
overseen can be attributed to the Board’s abject failures to make
demonstrable progress against its stated goals, properly allocate
strategic capital, adjust the Company’s cost-structure
post-spin-off and align executive pay with performance, instead
severely diluting the true owners of the business,
stockholders.
Fortunately, Rubric has a clear and actionable plan to restore
and rebuild stockholder value. We believe that by executing the
following, readily accessible value creation initiatives, Xperi can
get back on track and deliver significant value to
stockholders.
- Restore Accountability. Xperi should immediately order a
review of its 2022 Investor Day Goals and issue new goals if
necessary, as the failure to make progress against its revenue
growth and margin targets has led to significant declines in
consensus expectations. An improved Board that has the trust of its
investors and is clearly working towards achieving the Company’s
targets should be reflected in new consensus estimates over
time.
- Evaluate Perceive and Other Projects. Xperi should
continue the existing strategic alternatives review process for
Perceive – which Rubric prompted after years of cash burn
unbeknownst to stockholders – but with Board members better
positioned to properly evaluate the value of the business.
Moreover, Xperi must undertake a Company-wide capital allocation
review process to ensure stockholder capital is being used
effectively, and sell or shut down “science projects” that Xperi
might be incubating without transparency to stockholders or a clear
path to value creation.
- Reduce Excessive Costs. Xperi should remedy its
excessive compensation practices and remove additional costs in
order to match the Company’s currently bloated cost structure to
the decreased scale of the post-spin-off business, and ultimately
achieve margin improvement and cash flow generation. In our view,
there are surely plentiful opportunities to reduce operating
expenses given Xperi’s utter lack of cost rigor under the current
Board.
- Institute Pay-for-Performance. Xperi should improve its
compensation policies to align pay with stockholder returns and
re-introduce performance share units as the primary form of
compensation, as opposed to time-based restricted share units.
Knowing management only wins when stockholders win will improve
confidence in Xperi and the Board and should improve the Company’s
cost of capital in due course.
Taken together, we estimate, based on extensive diligence, that
Rubric’s plan has the potential to result
in a share price increase of $5.25 to $19.01 per
share.5
While we are confident our plan is straightforward and
achievable, the Board, as currently constituted, has proven itself
incapable of executing it. We ask you, our fellow stockholders: How
can the incumbent directors restore accountability when they are to
blame for Xperi’s prolonged underperformance and lack of
transparency? How can the incumbent directors follow through on the
successful evaluation of Perceive if they do not possess the
requisite semiconductor or technology product-market fit expertise?
How can the incumbent directors reduce excessive costs and
institute pay-for-performance compensation policies if they are the
very architects of the unsustainable and misaligned compensation
scheme that has so plagued Xperi? Why would
stockholders vote for the status quo that has resulted in the
equivalent of three steps forward after ten steps
back?
DO NOT LEAVE THE FATE OF YOUR INVESTMENT UP
TO CHANCE: ELECT RUBRIC’S NOMINEES - THOMAS A. LACEY AND DEBORAH S.
CONRAD - TO THE BOARD
At the upcoming Annual Meeting, the future of the Company, and
your investment, is at stake. Our director nominees – Thomas A.
Lacey and Deborah S. Conrad – have the plan, the expertise, and the
capital allocation and cost discipline required to help ensure that
the future of Xperi is a bright one.
Do not leave the fate of your investment
in the hands of incumbent directors who have at no time
demonstrated an ability to deliver value for stockholders – before
or after Xperi’s spin-off. Do not get fooled again! Vote the
WHITE proxy card FOR Rubric’s nominees Thomas A.
Lacey and Deborah S. Conrad.
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 Source: Bloomberg.
Calculated as of April 26, 2024. 4 Source: Bloomberg. Calculated as
of April 26, 2024. 5 See Rubric’s Investor Presentation issued on
April 29, 2024 for additional details.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240516642234/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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