UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Under Rule 14a-12
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Cypress Semiconductor
Corporation
(Name of Registrant as Specified In Its Charter)
T.J. Rodgers
J. Daniel
McCranie
Camillo Martino
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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FOR IMMEDIATE RELEASE
CYPRESS SEMICONDUCTORS LARGEST INDIVIDUAL STOCKHOLDER, T.J. RODGERS, NOMINATES TWO
HIGHLY QUALIFIED CANDIDATES FOR BOARD OF DIRECTORS
Nominees J. Daniel McCranie and Camillo Martino Will Help Board Eliminate
Ethical and Corporate Governance Violations and Restore Compliance with Companys Code of Business Conduct and Ethics
Cypresss Purported Changes to Strengthen Corporate Governance are Just An Attempt to Prevent Even Extraordinarily Qualified New
Directors from Joining the Board
Rodgers Sues Cypress Board to Obtain Books and Records Relating to Executive Chairman Ray
Binghams Irreconcilable Conflicts of Interest
Binghams Entanglement with Chinese Government-Backed Private Equity Firm
that Competes with Cypress Presents Tangible Current Risk to Cypress Stock Value
SAN JOSE, C.A., February 17, 2017T.J. Rodgers, founder
and former CEO, President and Director of Cypress Semiconductor Corp. (NASDAQ: CY) (Cypress or the Company) and the Companys largest individual stockholder, announced today that he has nominated two highly qualified
candidates to serve on Cypresss 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 isnt about T.J. Rodgers but about focusing the attention of all Cypress stockholders on these serious issues. The
nominees Ive 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 Cypresss books and records relating to transactions that appear, on their face, to be breaches of the Boards fiduciary duties. In response to Cypresss refusal
to supply the books and records, Rodgers has filed a lawsuit to compel production of these materials (see About the Lawsuit below).
Ray
Binghams Irreconcilable Conflicts of Interest
The Companys 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
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FOR IMMEDIATE RELEASE
backed by the government of the Peoples 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.
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Cypress has acquired more than thirty semiconductor companies since its inception in 1982 and acquisitions continue to be a major business strategy of Cypress.
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Canyon Bridges 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.
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As Cypresss Executive Chairman, Ray Bingham has intimate knowledge of the Companys 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.
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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 Binghams 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 Boards failure to take decisive action upon discovery of the conflict directly violates the Companys Code of
Business Conduct and Ethics, which sets forth crystal-clear policies on conflicts of interest seven of which have been violated by Binghams involvement with Canyon Bridge. Approved by the Board, Cypresss 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 Binghams divided loyalties have put the entire Companys reputation for ethical integrity at risk.
Ray Binghams
Excessive Compensation as Executive Chairman
Rodgers continued, One of the Companys 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 Companys 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 Companys five outside
directors. The Executive Chairman position was created as a temporary, short-term position to mentor the Companys 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.
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FOR IMMEDIATE RELEASE
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) Binghams affiliation with Canyon Bridge, ii) the Company and/or Canyon Bridges potential
acquisition of Lattice, (iii) the Board and managements compliance with the Code of Business Conduct and Ethics, and (iv) the Companys 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 Cypresss 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, Ive
nominated two highly qualified directors to put Cypress back on the right track.
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FOR IMMEDIATE RELEASE
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 Companys consent
solicitation relating to certain corporate governance changes.
Rodgers owns or controls voting of 8,625,619 shares of the Companys common stock.
Neither of the other participants owns or controls voting of any shares of the Companys 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 Companys consent solicitation, at the SECs website (http://www.sec.gov).
In addition, copies of such materials, when available, may be requested free of charge from Rodgerss proxy solicitor, MacKenzie Partners, Inc., 105 Madison Avenue, New York, NY 10016 or toll-free at (800)
322-2885.
Media Contacts
Abernathy MacGregor
Jeremy Jacobs / Sheila Ennis
212-371-5999
/
415-926-7961
JRJ@abmac.com
SBE@abmac.com
Investor Contacts
MacKenzie Partners
Daniel Burch / Larry Dennedy
212-929-5500
Dburch@mackenziepartners.com
ldennedy@mackenziepartners.com
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FOR IMMEDIATE RELEASE
About T.J. Rodgers
T.J. Rodgers
co-founded
Cypress Semiconductor Corporation in 1982 and served as the Companys 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
bachelors degree from Dartmouth College, graduating as salutatorian with majors in chemistry and physics. He received his masters 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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