March 6, 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 7.4% of the outstanding common stock of the Company, announced today that it has delivered an open letter to the shareholders of Tessera in response to the "Open Letter to Starboard Value" issued by Tessera's Board of Directors on
The full text of Starboard's letter is included below:
March 6, 2013
Open Letter to Shareholders of Tessera Technologies, Inc.
Dear Fellow Shareholders:
Starboard Value LP, together with its affiliates ("Starboard"), currently owns approximately 7.4% of the outstanding common shares of Tessera Technologies, Inc. ("Tessera" or the "Company"), making us one of the Company's largest shareholders.
As you may be aware, Starboard conducts extensive diligence using publicly available information in order to gain conviction in each of our investments. During the course of the ongoing diligence process in connection with our investment in Tessera, we became aware from sources, which we believe to be credible, that the Company's CEO may have been engaging in inappropriate behavior. This is not information that we set out to find. Rather, this was information that was volunteered to us. Starboard generally does not seek to raise personal issues in assessing the merits of changes at a company, and we were therefore reluctant to even disclose this information to Tessera. However, through continued diligence, we determined that the situation, if true, may have serious negative implications for the operations of the business and our investment. Therefore, we followed what we believed to be proper protocol and made the Company's board of directors (the "Board") aware of our concerns through a
letter so the Board could fully investigate the matter. We did not
disclose any of this sensitive information and had no intention to do so. In fact, the day after our private letter to the Board, we released a public letter to shareholders in which we intentionally omitted any reference to any personal issues.
A board of directors is supposed to serve as the shareholders' representatives and oversee best governance practices. Whistleblower claims should be delivered privately to the board of directors, and the board of directors has a responsibility to investigate such matters. For this reason, we believe that the Board's response on
March 4, 2013
to the existence of potential inappropriate conduct by Dr. Young is surprising and irresponsible. In our experience, most well-functioning boards would respond to such allegations privately by committing to fully investigate the situation and take appropriate actions, as necessary. In the letter to Starboard, the Board stated,
"In the meantime please note that the Board unanimously stands behind our CEO Dr. Young."
We are concerned that the Board may be standing behind Dr. Young without first having formally investigated this potentially serious issue. The Board's handling of this matter is even more troubling in light of the recent resignations of Messrs. Rivette and Goodrich, who cited disagreements with Board leadership, oversight, and strategy in their resignation letter. We are not at all surprised that the new, smaller Board is "unanimous" in their support of Dr. Young.
The Company's "Open Letter to Starboard Value" then goes on to state that Starboard omitted the demands we made in our private letter from our public letter, implying that this was somehow unethical. To the contrary, we intentionally omitted the information in an attempt to keep the public debate to business issues, while privately initiating a dialogue with the Board regarding a potential settlement. Typically those discussions would remain private. Again, the Board chose to publicly disclose this information, not us. Now that our proposal is public, however, it deserves a bit more explanation.