Rubric Capital Management Responds to Xperi Inc.’s Amended Investor Presentation
Confident
Emphasizes that Xperi’s Latest Attempt to Cover Up Dilution is Highly Disingenuous
Urges Stockholders to Vote FOR Rubric’s Nominees
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Rubric Analysis of Dilution (Source: Regulatory filings of Xperi and its predecessor)
As longtime stockholders of Xperi (and its predecessor company led by the same directors), we have tolerated many things. Years of underperformance. Poor transparency. Excessive compensation. Wanton spending on ‘science projects.’ But we cannot tolerate the twisting of financial realities to present falsified versions of share performance and dilution to investors. That is a bridge too far.
Fairytale Performance
In Xperi’s latest investor materials, the Company and its Board of Directors (the “Board”) present a version of share performance which would be utterly alien to any long-term Xperi stockholder. Instead of cutting the data in creative ways, let Rubric lay the TSR analysis out plainly for all investors to judge:
Since |
3 Year TSR | ||||||||
Predecessor |
|
Combined | Predecessor |
|
Combined | ||||
XPER | XPER | TSR | XPER | XPER | TSR | ||||
A | B | A + B | A | B | A + B | ||||
|
-10.6% |
-33.5% |
-40.6% |
-33.7% |
-33.5% |
-56.0% |
|||
Underperformance vs Russell 3000 |
-58.3% |
-73.7% |
-153.0% |
-18.1% |
-73.7% |
-77.2% |
|||
|
-57.4% |
-33.5% |
-71.7% |
-33.7% |
-33.5% |
-56.0% |
|||
Underperformance vs Russell 3000 |
-133.6% |
-73.7% |
-184.1% |
-18.1% |
-73.7% |
-77.2% |
|||
Source: Bloomberg. Calculated as of |
It is undeniable that the Board members Rubric is seeking to replace –
Shockingly, in an attempt to skirt accountability, the Company in its materials excluded a full quarter of trading to present a fairytale version of its share performance to investors. Better yet, the Company attempted to take credit for the post-spin performance of
Doubling Down on Dilution
Furthermore, Xperi, in its amended investor presentation, has doubled down on its claim that the Board is acting as careful stewards of stockholders’ capital by embracing the GAAP-based fallacy that stock-based compensation does not count as dilution for a poorly performing company like Xperi.
See “Xperi Presentation of Dilution” Slide
Allow us to present a different, more honest, analysis of Xperi’s dilution, which highlights the Board’s aggressive use of stock-based compensation at the expense of stockholders.
See “Rubric Analysis of Dilution” Slide
We focus on 2021, the last full year before Xperi’s spin-off, and 2023, the first full year following the spin-off, to present to you both GAAP stock-based compensation and RSU grants on a per share basis. Our doing so demonstrates just how dramatically the Xperi Board has accelerated dilution to stockholders. Due to the spin-off, Xperi’s share count today is 60% less than it was in 2021, but its stock-based compensation has increased on an absolute basis. Accordingly, stockholders lose and insiders reap the rewards, with almost 80% of those RSUs tied not to performance but to the passage of time. It is clear to us that Xperi is cultivating a culture of ‘rest and vest.’
Xperi doesn’t seem to understand why Rubric is seeking new representation on the Board. We are doing so because since the spin-off, it is apparent that the Xperi Board has set stockholders and insiders on two different paths. It is also clear to us that the path for stockholders is currently typified by investment losses and margin and growth disappointment, while the other path, for insiders, is one of personal enrichment based on tenure at the expense of stockholders.
Rubric wants the paths of stockholders and insiders to align so that both can share in the benefit of an improved Xperi, and we are confident that electing
Vote the WHITE proxy card TODAY
If you have any questions, require assistance in voting your WHITE universal proxy card, or need additional copies of Rubric’s proxy materials, please contact our proxy solicitor
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