Rubric Capital Management Sends Letter Urging Xperi Inc. Stockholders to Reject the Status Quo of Value Destruction Under Current Board
Maintains that After Years of Underperformance Both Before and After the Spin-Off, Incumbent Directors
Presents a Clear and Actionable Plan to Create Meaningful Value
Urges Stockholders to Vote FOR Rubric’s Nominees
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:
Dear Fellow Stockholder,
Xperi Inc.’s (“Xperi” or the “Company”) 2024 Annual Meeting of Stockholders (the “Annual Meeting”) scheduled to be held on
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. |
We urge you to vote FOR Rubric’s nominees,
A VOTE FOR INCUMBENT DIRECTORS DAVID HABIGER AND
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
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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 andMs. Antonellis have continued to serve as directors, Xperi has generated a TSR of nearly –34%.3 -
Mr. Habiger andMs. 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,
RUBRIC HAS A CLEAR AND ACTIONABLE PLAN FOR MEANINGFUL VALUE CREATION
We believe the persistent underperformance and culture of mediocrity that
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 shouldcontinue 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
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
At the upcoming Annual Meeting, the future of the Company, and your investment, is at stake. Our director nominees –
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
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
Sincerely,
Managing Partner
__________________________
1 Source: Bloomberg. Calculated as of
2 Source: Bloomberg. Calculated as of
3 Source: Bloomberg. Calculated as of
4 Source: Bloomberg. Calculated as of
5 See Rubric’s Investor Presentation issued on
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