March 1, 2013
/PRNewswire/ -- Starboard Value LP (together with its affiliates, "Starboard"), one the largest shareholders of Tessera Technologies, Inc. (NASDAQ: TSRA) ("Tessera" or the "Company") with approximately 7% of the outstanding common stock of the Company, announced today that it has delivered an open letter to the shareholders of Tessera, the full text of which is included below:
March 1, 2013
Open Letter to Shareholders of Tessera Technologies, Inc.
Dear Fellow Shareholders:
Starboard Value LP, together with its affiliates ("Starboard"), currently owns approximately 7% of the outstanding common shares of Tessera Technologies, Inc. ("Tessera" or the "Company"), making us one of the Company's largest shareholders. As we described in a letter we delivered to the Board of Directors of Tessera (the "Board") and publicly disclosed on
February 19, 2013
"), we believe the Company is significantly undervalued and that opportunities exist within the control of management and the Board to unlock value for the benefit of all shareholders. For over a year now, we have been attempting to communicate constructively with Tessera in the hope that we could work together to craft a strategy to improve the Company's financial performance and deliver increased value to shareholders of the Company. Unfortunately, the existing management team and Board have shown no interest in working with us and instead have adopted certain measures designed to disenfranchise shareholders and entrench a subset of the Board.
Recent events indicate that the center of power on the Board and management has no intention of changing, and, in fact, has taken actions to further entrench and insulate themselves from outside influence. The frustration from the Company's dismal performance and poor governance has now extended beyond shareholders to include two well-respected board members. On
February 25, 2013
, due to Sarbanes-Oxley requirements, it was publicly reported that three days earlier, two incumbent directors of Tessera,
, had delivered a letter to the Board stating that their concerns regarding the behavior of the Chairman had become untenable and that they intended to resign, effective as of the close of business today, if the Chairman of the Board, Mr.
, had not resigned from the Board before such time. The letter clearly articulated the rationale for their actions:
"In our opinion the failure of current board leadership has prevented effective operating oversight, effective cost control, strategic planning, profit and loss discipline, economically rational strategies for our DOC initiatives and appropriate focus on our core business. The negative effect of these failures has significantly impacted shareholder value." – Directors Kevin Rivette and John Goodrich
"Mr. Boehlke has arrogated to himself necessary board review and guidance of management.... His actions have interfered with the board's orderly and necessary oversight of the company." – Directors Kevin Rivette and John Goodrich
"We believe [Mr. Boehlke's] actions have prevented our board from meeting its required standards of performance and returning value to the shareholders. It is our belief that his efforts to force the removal of directors who do not support him and to independently find new directors violates the authority of the nominating committee and of the full board...." – Directors Kevin Rivette and John Goodrich
"We have repeatedly tried to affect what we believe are necessary reforms such as greater focus on our core business, effective cost controls, investment analysis and improved board governance to make this company highly successful. Each time Mr. Boehlke has prevented these initiatives from moving forward." – Directors Kevin Rivette and John Goodrich
The abrupt resignations of
, a seasoned executive with significant expertise in intellectual property strategy through his experiences at 3LP Advisors and IBM Corporation, and
, a named former partner of
Wilson Sonsini Goodrich
& Rosati, a well-respected law firm, are cause for serious concern. Needless to say, the contents of their resignation letter are extremely disturbing and point to a dictatorial Chairman and dysfunctional board environment in desperate need of shareholder intervention. In our experience, we have rarely witnessed such scathing accusations and internal upheaval, with disagreements rising to a level where highly qualified board members felt they had no choice but to resign because of the actions of the Chairman of the Board.
Further, the resignation of Messrs. Goodrich and Rivette follows a long list of executive departures, including the recent departures of Dr. Farzan "Bob" Roohparvar, former President of DigitalOptics Corporation ("DOC"), and
, former President of Intellectual Property and Micro-Electronics Division, both of whom departed the Company within the past six months and approximately just eighteen months after joining Tessera. This is further evidence of significant turmoil and frustration with the leadership of the Company.
We believe these facts, along with the analysis included in our First Letter, point to significant failures on the part of the existing management team and incumbent Board. They have failed to produce acceptable financial results; they have failed to follow through on publicly stated commitments; they have failed to create a healthy and productive environment where employees can thrive and directors can properly oversee the Company; and they have failed to create value for shareholders.