SAN JOSE, Calif., Feb. 22, 2017 /PRNewswire/ -- T.J. Rodgers,
founder and former CEO, President and Director of Cypress
Semiconductor Corp. (NASDAQ: CY) ("Cypress" or "the Company") and
the Company's largest individual stockholder, announced today that
he has nominated two highly qualified candidates to serve on
Cypress's Board of Directors in the election of directors at the
2017 Annual Meeting of Stockholders. Rodgers owns or controls
voting of 8,625,619 shares of Cypress common stock, more than four
times as much as all Cypress directors and executive officers
combined.
"Cypress Semiconductor faces serious conflicts of interest and
ethical deficiencies," said Rodgers. "Rather than address these,
the Cypress Board has chosen to announce what they purport to be
changes to strengthen corporate governance but which are in fact
simply an attempt to prevent even extraordinarily qualified new
directors from joining the Board. I deliberately chose to nominate
for the Board two highly qualified industry veterans, because this
isn't about T.J. Rodgers but about
focusing the attention of all Cypress stockholders on these serious
issues. The nominees I've proposed, Dan
McCranie and Camillo Martino,
both of whom are semiconductor experts, will better serve the Board
than conflicted Executive Chairman Ray
Bingham and Lead Director Eric
Benhamou, who I believe has repeatedly failed to acknowledge
or correct the conflicts of interest situation."
"Dan and Camillo have a background in Board leadership and deep
knowledge of the semiconductor industry. I believe these qualities
will enable them to enhance the effectiveness of the Board and
support Cypress management in capitalizing on the opportunities to
increase stockholder value during this challenging period for
semiconductor companies."
In light of his concerns about the conflicts and role of the
Executive Chairman, Rodgers delivered a demand pursuant to Section
220 of the Delaware General Corporation Law for copies of Cypress's
books and records relating to transactions that appear, on their
face, to be breaches of the Board's fiduciary duties. In
response to Cypress's refusal to supply the books and records,
Rodgers has filed a lawsuit to compel production of these materials
(see "About the Lawsuit" below).
Ray Bingham's Irreconcilable
Conflicts of Interest
The Company's Executive Chairman, Ray
Bingham, simultaneously serves as one of two Founding
Partners of Canyon Bridge Capital Partners, a self-described
private equity buyout group funded and backed by the government of
the People's Republic of China.
Cypress and Canyon Bridge compete head-to-head to acquire
semiconductor companies in a time of rapid consolidation in the
semiconductor industry.
- Cypress has acquired more than thirty semiconductor companies
since its inception in 1982 and acquisitions continue to be a major
business strategy of Cypress.
- Canyon Bridge's pending $1.3
billion acquisition of U.S. programmable logic maker Lattice
Semiconductor, a company Cypress has attempted to acquire on two
previous occasions, clearly demonstrates that Canyon Bridge
competes directly with Cypress.
- As Cypress's Executive Chairman, Ray
Bingham has intimate knowledge of the Company's M&A
strategy and Rodgers believes that Bingham can use that knowledge
to benefit Canyon Bridge to the detriment of the Company and its
stockholders.
Bingham did not reveal his involvement with Canyon Bridge to the
Board when Lattice approached Cypress as a potential "white knight"
alternative to a transaction with Canyon Bridge. Rodgers believes
that the Board, including lead director Benhamou, failed to take
appropriate action when it learned about Bingham's leadership
position as one of the top two executives at Canyon Bridge, failed
to take action when approached by Rodgers about this conflict of
interest and failed again to address this issue by rejecting
Rodgers' demand for books and records relating to these
matters.
Rodgers added, "The Board's failure to take decisive action upon
discovery of the conflict directly violates the Company's Code of
Business Conduct and Ethics, which sets forth crystal-clear
policies on conflicts of interest – seven of which have been
violated by Bingham's involvement with Canyon Bridge. Approved by
the Board, Cypress's Code of Business Conduct and Ethics is the
cornerstone of the hard-earned, pristine ethical reputation that
Cypress has earned with its employees, customers and stockholders
for over 35 years. I believe that Bingham, Benhamou and the Board
have failed to live up to this code, and that Bingham's divided
loyalties have put the entire Company's reputation for ethical
integrity at risk."
Ray Bingham's Excessive
Compensation as Executive Chairman
Rodgers continued, "One of the Company's Core Values is, 'We do
not tolerate waste.' In direct violation of that principle, the
Board continues to support the excessive and unnecessary
compensation of Bingham as Executive Chairman, which I believe is a
failure to act in the best interest of stockholders."
Bingham is eligible to receive nearly $900,000 combined in yearly salary and bonus,
more than double the aggregate yearly estimated combined cash
compensation of the Company's five outside directors. In addition,
Bingham has received or will receive equity grants worth
$4.5 million, more than four times
the yearly estimated combined equity awards granted to the
Company's five outside directors. The Executive Chairman position
was created as a temporary, short-term position to mentor the
Company's new CEO. At this point, Rodgers believes that the
time spent on mentoring has been minimal, that position should be
eliminated given its cost versus its benefit and that Bingham
should receive normal directors' compensation.
About the Director Nominees
J. Daniel McCranie
is currently Chairman at ON Semiconductor Corp. and previously
served as Non-Executive Chairman at Freescale Semiconductor, Inc.
He has served on the Board of Directors at Mentor Graphics Corp.
since 2012. He served on the Board of Directors of Cypress
Semiconductor Corp. from 2005 through 2014. McCranie was previously
employed as Executive Vice President-Sales & Applications by
Cypress Semiconductor Corp., President & Chief Executive
Officer by Virage Logic Corp., Vice President-Sales & Marketing
by Cypress Semiconductor Corp., and Chairman, President & Chief
Executive Officer by SEEQ Technology, Inc.
Camillo Martino has
served as a member of the Board of Directors of MagnaChip
Semiconductor Corp. since August
2016. Martino has served as a member of the Board of
Directors of VVDN Technologies, a private company, since
March 2016 and as Vice Chairman of
the Board of Directors of SAI Technology, Inc., a private company
and leading supplier of Secure Cloud Open Stack technology
solutions for various vertical markets, since April 2015. Previously, he served as director and
CEO of Silicon Image, Inc.; COO at SAI Technology Inc.; and
President, CEO and Director of Cornice Inc. He also served as
Executive Vice President and COO of DSP chipmaker Zoran
Corporation. His career began at National Semiconductor
Corporation, where he held multiple positions over a nearly 14-year
tenure at the company.
About the Lawsuit
On January 19 2017, Rodgers served
Cypress with a demand for books, records and stocklist
materials (the "Section 220 Demand") pursuant to 8 Del. C. § 220
("Section 220"). The Section 220 Demand requested inspection of
documents and information related to i) Bingham's affiliation with
Canyon Bridge, ii) the Company and/or Canyon Bridge's potential
acquisition of Lattice, (iii) the Board and management's compliance
with the Code of Business Conduct and Ethics, and (iv) the
Company's list of stockholders and information regarding the 2017
annual meeting. The purpose of the Section 220 Demand was primarily
to investigate breaches of fiduciary duty by Bingham and the Board,
identify what steps, if any, the Board has taken to remedy these
breaches, and determine if, and what, additional steps need to be
taken to protect the Company from harm associated with these
breaches.
On January 26, 2017 – and in
violation of Section 220 – Cypress refused to produce books and
records in response to the Section 220 Demand. Faced with
continued Cypress Board intransigence, Rodgers filed a lawsuit on
January 27, 2017 to compel production
of these materials. The case is captioned Rodgers v. Cypress
Semiconductor Corp., C.A. No. 2017-0070, in the Court of Chancery
of the State of Delaware.
Prior to initiating the lawsuit and nominating directors,
Rodgers sent multiple letters to the Cypress Board in an effort to
engage in a private conversation about resolving these issues in
Cypress's best interest. However, the Board ignored the letters,
rejected the Section 220 Demand, and has taken no action to address
the concerns Rodgers has raised.
Rodgers then tried to resolve these issues privately with the
Cypress Board and reach a settlement that would avert the need to
make his concerns public. After perfunctory interviews of the
two nominees, however, the Cypress Board responded only with a
hasty "settlement proposal" that failed to address the two main
issues raised in the lawsuit directly, either with a proposed
process for addressing those issues in the future or with a
proposed structure that enable those issues to be addressed.
Rodgers concluded, "Cypress is a company that was built to last
for the long term through a commitment on the part of every
employee to 'do what is right for Cypress,' one of our Core Values.
I believe the current Board has failed to honor that commitment. As
a concerned stockholder and a believer in both the Core Values and
the Cypress Code of Business Conduct and Ethics, I've nominated two
highly qualified directors to put Cypress back on the right
track."
Additional Information and Where to Find It
T.J. Rodgers is the co-founder of
the Company. Rodgers, J. Daniel
McCranie and Camillo Martino
are participants in the solicitation of proxies from stockholders
in connection with the 2017 Annual Meeting of Stockholders (the
"Annual Meeting") of the Company. Rodgers intends to file a proxy
statement (the "Proxy Statement") with the Securities and Exchange
Commission (the "SEC") in connection with his solicitation of
proxies for the Annual Meeting. No decision has been made by the
participants at this time as to any response by the participants to
the Company's consent solicitation relating to certain corporate
governance changes.
Rodgers owns or controls voting of 8,625,619 shares of the
Company's common stock. Neither of the other participants owns or
controls voting of any shares of the Company's common stock.
Additional information regarding such participants, including their
direct or indirect interests, by security holdings or otherwise,
will be included in the Proxy Statement and other relevant
documents to be filed with the SEC in connection with the Annual
Meeting.
Promptly after filing its definitive Proxy Statement with the
SEC, Rodgers intends to mail the definitive Proxy Statement and a
proxy card pursuant to applicable SEC rules. STOCKHOLDERS ARE URGED
TO READ THE PROXY STATEMENT (INCLUDING ANY AMENDMENTS OR
SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS THAT RODGERS
WILL FILE WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION. Stockholders may obtain, free of
charge, copies of the definitive Proxy Statement and any other
documents filed by Rodgers with respect to the Company with the SEC
in connection with the Annual Meeting or, if applicable, any
response by the participants to the Company's consent solicitation,
at the SEC's website (http://www.sec.gov). In addition, copies of
such materials, when available, may be requested free of charge
from Rodgers's proxy solicitor, MacKenzie Partners, Inc., 105
Madison Avenue, New York, NY 10016
or toll-free at (800) 322-2885.
About T.J. Rodgers
T.J. Rodgers co-founded Cypress
Semiconductor Corporation in 1982 and served as the Company's
President and Chief Executive Officer until April 2016 and as a member of its Board of
Directors until August 2016. He is a
former chairman of the Semiconductor Industry Association (SIA) and
SunPower Corp. and currently sits on the boards of directors of
high-technology companies, including Bloom Energy (fuel cells),
Enphase (solar energy electronics), WaterBit (precision
agriculture) and Enovix (silicon lithium-ion batteries). He has
been honored for his foundational support over a 20-year period of
the Second Harvest Food Bank of Santa
Clara and San Mateo
Counties and the California Association of African American
Educators. Rodgers received his bachelor's degree from Dartmouth College, graduating as salutatorian with
majors in chemistry and physics. He received his master's degree
and Ph.D. in electrical engineering from Stanford University. While pursuing his Ph.D.
degree, Rodgers invented the VMOS process technology, which he
later licensed to American Microsystems, Inc.
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SOURCE T.J. Rodgers