SAN JOSE, Calif., April 24, 2017 /PRNewswire/ -- T.J. Rodgers,
founder and former CEO of Cypress Semiconductor Corporation
(NASDAQ: CY) ("Cypress" or "the Company") and the Company's largest
individual stockholder, today filed a lawsuit in the Delaware Court of Chancery seeking to compel
the Cypress Board of Directors to make supplemental and corrective
disclosures to address numerous material omissions and
misstatements of fact in the Cypress Board's proxy materials.
Rodgers said, "Cypress directors have a legally mandated 'Duty
of Candor' to make complete disclosures to Cypress stockholders on
the issues in this election, including why they are allowing
Ray Bingham to serve as executive
chairman while he has violated and is continuing to violate
numerous provisions of Cypress's Code of Business Conduct and
Ethics. This second lawsuit seeks to ensure that Cypress
stockholders have the information they need to cast an informed
vote at the upcoming June 8, 2017
Annual Meeting."
Bingham's Employment by a Cypress Competitor
Is a Serious, Ongoing Conflict of Interest
While simultaneously serving as Cypress executive chairman, Mr.
Bingham is also actively working as a "Founding Partner" of Canyon
Bridge, a private equity firm backed by the People's Republic of China that now
competes head-on with Cypress in the critical semiconductor M&A
market. The Cypress Board has asserted in the Company's proxy
statement that Mr. Bingham's simultaneous executive leadership
roles at Canyon Bridge and Cypress do not constitute a conflict of
interest under the Cypress Business Conduct and Code of Ethics and
thus claims that Rodgers's assertions are "unfounded and have no
basis."
Rodgers said, "I believe that by making this assertion in an
important legal document distributed to stockholders, the Cypress
Board of Directors has deliberately chosen to ignore our first,
successful lawsuit to obtain Cypress documents and thus solicited
Cypress stockholders using material misstatements and omissions
including the failure to disclose critical legal findings made by
the Delaware Court of
Chancery. In particular the Court stated:
"The dual hats Bingham wears
suggest that his interests with respect to Canyon Bridge may well
conflict with the business interests of Cypress," and that a
"credible basis" exists "to infer that Bingham violated the Code's
prohibition on 'simultaneous employment of any kind without written
permission of the Company.'"
Rodgers continued, "Cypress stockholders have a right to
accurate and complete information before voting at the annual
meeting, yet the Cypress Board continues to ignore its Duty of
Candor by misleading stockholders regarding Mr. Bingham's conflicts
as well as the Board's own failure to address this serious problem,
which it has known about at least since December 9, 2016 when I wrote a private letter
describing the problem and urging Board action."
The Cypress Board Also Continues to Defend Ray
Bingham's Excessive Compensation, Which – Unlike the Compensation
of All Other Cypress Senior Executives – Has No Performance
Criteria
In addition to having a clear conflict of interest, Mr. Bingham
also has negotiated excessive compensation for his part-time work
at the currently unnecessary job of executive chairman. His annual
salary plus target bonus is $877,500,
and he has been granted a total of $4.5
million in restricted stock units (RSUs). Despite Mr.
Bingham's part-time attendance at Cypress, the Cypress Board has
kept him on as executive chairman and has very recently awarded him
RSUs worth $3 million, which vest
over three years, undermining the Board's claim that Mr. Bingham's
executive chairman "mentoring" position is "temporary." To make
matters worse, in stark contrast to all Cypress executives eligible
for the Company's PARS (Performance Accelerated Restricted Stock)
program, his RSUs vest without any performance requirements –
meaning that Mr. Bingham will receive $4.5
million in compensation for simply remaining at Cypress in a
part-time position, while also working for a direct Cypress
Chinese-sovereign-backed competitor.
The Cypress Board's Proxy Materials Are Full
of Extreme Mischaracterizations and Omissions
These factual errors include both ignoring and misrepresenting
various findings of the Delaware
Court of Chancery in our first lawsuit. On April 21, 2017, the Delaware Court of Chancery entered an order
requiring Cypress to produce documents in response to Rodgers's
Section 220 demand to investigate potential breaches of fiduciary
duty and violations of Cypress's Code of Business Conduct and
Ethics by Ray Bingham and the
failures by the Cypress Board to take corrective action. The
Court's Post-Trial Opinion, issued on April
17, 2017, held that Rodgers was entitled to all the
categories of documents that he sought but which Cypress had
refused to produce.
Instead of taking action on its own to address Mr. Bingham's
conflict of interest and excessive compensation problems, the
Cypress Board has now attempted to deflect stockholders from these
critical issues with a wildly inaccurate personal attack on
T.J. Rodgers. For example, in its
just-published proxy materials, Cypress falsely claims that Rodgers
"declared war" on the Company and is "motivated by a personal
vendetta." However, in its Post-Trial Opinion on the first lawsuit,
the Delaware Court (a) accepted
Rodgers's trial testimony, (b) rejected Cypress's assertion that
Rodgers's actual purpose is to pursue a personal vendetta against
Mr. Bingham, and (c) found that Rodgers has a credible basis to
suspect that Bingham may have violated his fiduciary duties and
Cypress's Code of Business Conduct and Ethics.
Rodgers stated, "As a major Cypress fan and major stockholder
with most of my net worth invested in the Company, I am driven by
my belief that these serious wrongdoings, unaddressed by the
Cypress Board, are a threat to stockholder value. The Board has a
duty to the Cypress stockholders to resolve the executive
chairman's obvious conflict of interest and gross overcompensation
problems. I have made a standing offer to the Cypress Board that if
candidates J. Daniel McCranie and
Camillo Martino are seated on the
Board under appropriate terms and with appropriate committee
positions, despite their being a distinct minority of two among
current directors, I would trust in their energy and integrity to
resolve these problems – without the need for further litigation or
a proxy contest and without the requirement that Mr. Bingham and
lead independent director Eric
Benhamou leave the Cypress Board. Does this offer sound
vendetta-driven to you? The Board is fully aware of my offer, which
still stands, yet it has resorted to what I believe are false proxy
statements and ad hominem attacks on the nominees and me as a
smokescreen to cover for its refusal to address the big problem:
Cypress should not be forced to complete against its own
executive chairman in the M&A market."
Rodgers's Second Lawsuit Focuses on the
Cypress Board's Refusal to Disclose the Truth About Bingham's Work
for a Direct Cypress Competitor
Rodgers's claims in the second lawsuit filed today in the
Delaware Court of Chancery include
specific allegations regarding Cypress's Definitive Proxy Statement
and other proxy materials which:
- Fail to describe accurately and completely the timing and scope
of Mr. Bingham's activities at Canyon Bridge;
- Fail to mention even one of the seven separate and individually
applicable ethical guidelines and procedures that Mr. Bingham
violated by founding and acting on behalf of Canyon Bridge—a direct
competitor of Cypress in the critical semiconductor M&A
market;
- Falsely state that Rodgers's concerns regarding Bingham's
irreconcilable conflict of interest are unfounded despite the
finding to the contrary by the Delaware Court of Chancery that Rodgers has a
credible basis to believe that Mr. Bingham's relationships with
Canyon Bridge and Cypress represent a conflict of interest;
- Fail to disclose the Cypress Board's actual factual findings,
conclusions, and decisions regarding Mr. Bingham's relationship
with Canyon Bridge, Bingham's non-compliance with Cypress' Code of
Business Conduct and Ethics, and the potential risks to Cypress
resulting from Mr. Bingham's work for a direct competitor of
Cypress;
- Fail to disclose what was discussed, what decisions made, and
what actions taken as a result of a call between Cypress "lead
independent director" Eric Benhamou
and an unidentified senior representative of Canyon Bridge (and
their respective lawyers) on January 23,
2017.
Rodgers calls on the Board of Directors of Cypress to make full
and accurate disclosures to Cypress stockholders promptly regarding
these important issues at the heart of the upcoming election of
directors.
The Cypress Board Will Greatly Benefit From
Just Two New Directors With Semiconductor CEO Experience and
Absolute Integrity
Rodgers concluded, "At the upcoming Annual Meeting, stockholders
will have the opportunity to elect two extraordinary new Directors,
who would upgrade the Cypress Board. Dan
McCranie and Camillo Martino
have the operational expertise necessary to guide Cypress through
the next stage of its growth and to take appropriate steps to
protect Cypress from future ethical conflicts. In contrast to the
current members of the Cypress Board, McCranie and Martino have
experience as semiconductor company CEOs to complement their
governance experience and reputations for integrity."
Whether or not you plan to attend the annual meeting, your
prompt action is important. MAKE YOUR VIEWS CLEAR TO THE BOARD
BY AUTHORIZING A PROXY TO VOTE FOR EACH PROPOSAL BY FOLLOWING THE
INSTRUCTIONS ON THE GOLD PROXY CARD. Your vote is
important, no matter how many or how few shares of common stock you
own.
Do not return any white proxy card that you may receive from the
Company relating to the Annual Meeting, even as a protest vote.
If you have already submitted a white proxy card to the Company
relating to the Annual Meeting, it is not too late to change your
vote. To revoke your prior proxy and change your vote, simply sign,
date and return the GOLD proxy card in the postage-paid envelope
provided. Only your latest signed and dated proxy will be
counted.
For more information about the CypressFirst nominees, please
read the CypressFirst Proxy Statement. The CypressFirst Proxy
Statement, the Post-Trial Opinion
(http://cypressfirst.com/pdf/Post-Trial-Opinion.pdf) of the
Delaware Court of Chancery in the
Section 220 litigation, and Rodgers's Complaint
(http://cypressfirst.com/pdf/Second-Complaint.pdf) against the
Cypress Board of Directors for their misstatements and omissions in
Cypress' proxy materials, and other related materials, can be
viewed online at www.CypressFirst.com. For additional
information or assistance, please contact MacKenzie Partners, Inc.,
the firm assisting CypressFirst in the solicitation of proxies:
105 Madison Avenue
New York, New York 10016
CypressFirst@mackenziepartners.com
Toll-Free (800) 322-2885
Additional Information and Where to Find It
T.J. Rodgers is the founding CEO of
the Company. Rodgers, J. Daniel
McCranie and Camillo Martino
may be deemed to be participants in the solicitation of proxies
from stockholders in connection with the 2017 Annual Meeting of
Stockholders (the "Annual Meeting") of the Company. Rodgers,
McCranie and Martino have filed a definitive proxy statement (the
"CypressFirst Proxy Statement") and accompanying GOLD proxy
card with the Securities and Exchange Commission (the "SEC") in
connection with his solicitation of proxies for the Annual
Meeting.
Rodgers owns or controls voting of 8,727,619 shares of the
Company's common stock. McCranie and Martino own 25,000 and
10,000 shares, respectively, of the Company's common stock.
Additional information regarding such participants, including their
direct or indirect interests, by security holdings or otherwise,
are included in the CypressFirst Proxy Statement and may be
included in other relevant documents to be filed with the SEC in
connection with the Annual Meeting.
Rodgers, McCranie and Martino have mailed the definitive
CypressFirst Proxy Statement and a GOLD proxy card pursuant
to applicable SEC rules. STOCKHOLDERS ARE URGED TO READ THE
CYPRESSFIRST PROXY STATEMENT (INCLUDING ANY AMENDMENTS OR
SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS THAT RODGERS,
McCRANIE AND MARTINO HAVE FILED OR 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 CypressFirst Proxy Statement and any other related
documents filed by CypressFirst with respect to the Company with
the SEC in connection with the Annual Meeting at the SEC's website
(http://www.sec.gov). In addition, copies of such materials,
when available, may be requested free of charge from MacKenzie
Partners, Inc., 105 Madison Avenue, New
York, NY 10016 or toll-free at (800) 322-2885 or by email:
CypressFirst@mackenziepartners.com.
About J. Daniel
McCranie
J. Daniel
McCranie has served as Chairman at ON Semiconductor Corp.
since 2002 and is scheduled to resign from the Board in May
2017. He previously served as Non-Executive Chairman at
Freescale Semiconductor, Inc. He served on the Board of Directors
at Mentor Graphics Corp. from 2012 until its sale to Siemens
Corporation in April 2017. He served
on the Board of Directors of Cypress Semiconductor Corp. from 2005
through 2014. He has served as Chairman of Actel Corporation,
Chairman of Virage Logic, Inc, Chairman of Xicor Corporation, and
Board Director of California Microdevices, Inc. 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.
About Camillo Martino
Camillo Martino has served as a
member of the Board of Directors of MagnaChip Semiconductor Corp.
since August 2016. He was appointed
to the Board of Directors of MosChip in April 2017. 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, 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 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 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