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. )
Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
Check the appropriate box:
☒ Preliminary Proxy Statement
☐ Confidential,
for Use of the Commission (as permitted by Rule 14a-6(e)(2))
☐ Definitive Proxy
Statement
☐ Definitive Additional
Materials
☐ Soliciting Material Pursuant to
Rule 14a-12
ACACIA RESEARCH CORPORATION
(Name of Registrant as Specified In Its Charter)
_____________________________
(Name of Person(s) Filing Proxy Statement, if other
than the Registrant)
Payment of Filing Fee (Check the appropriate box):
☒
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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Proposed maximum aggregate value of transaction:
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Total fee paid:
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Fee paid previously with preliminary materials:
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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Filing Party:
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Date Filed:
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PRELIMINARY PROXY
STATEMENT – SUBJECT TO COMPLETION
April [ ], 2021
Dear Stockholders,
We are very pleased to invite you to the 2021 Annual
Meeting of Stockholders of Acacia Research Corporation.
Our Board is committed to the highest standards
of corporate governance. The first responsibility of directors is to represent stockholders, and our Board is fully committed to the highest
level of accountability.
As representatives of your Board of Directors,
it is our pleasure to work closely with the other members of the Board who are similarly committed to our stockholders and providing effective
oversight and guidance to management. We deeply value your support.
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Very truly yours,
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Clifford Press
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Chief Executive Officer
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Alfred Tobia
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President & Chief Investment Officer
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The attached Proxy Statement is dated April [ ], 2021 and is first
being mailed on or about April [ ], 2021.
If you have any questions or require any assistance
with respect to voting your shares, please contact our proxy solicitor at the contact listed below:
Saratoga Proxy Consulting LLC
520 8th Avenue, 14th Floor
New York, NY 10018
(212) 257-1311
Stockholders Call Toll Free at: (888) 368-0379
Banks & Brokers may call: (212) 257-1311
Email: info@saratogaproxy.com
ACACIA RESEARCH CORPORATION
767 THIRD AVENUE, SUITE 602
NEW YORK, NY 10017
NOTICE OF VIRTUAL ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON [_______], 2021
TO OUR STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the 2021 Annual Meeting
of Stockholders (the “Annual Meeting”) of Acacia Research Corporation will be held on [
], [ ], 2021, at [ ]:00 [ ].m., Eastern Time, via a live webcast, which can be accessed on the Internet by visiting
www.virtualshareholdermeeting.com/ACTG2021. Due to concerns regarding the coronavirus, or COVID-19, outbreak and to assist in protecting
the health and well-being of our stockholders and employees, we are holding the Annual Meeting in a virtual format to provide a consistent
experience to all stockholders regardless of location.
To access the Annual Meeting, you will need a 16-digit
control number. The control number is provided on your proxy card or through your broker or other nominee if you hold your shares in "street
name."
Stockholders will be able to attend, vote and submit
questions virtually during the Annual Meeting.
We are holding the Annual Meeting for the following
purposes, as more fully described in the Proxy Statement accompanying this Notice of Annual Meeting:
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1.
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To elect six directors to serve on our Board of Directors until the 2022 Annual Meeting of Stockholders or until their respective
successors are duly elected and qualified;
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2.
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To ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31,
2021;
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3.
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To approve, on a non-binding, advisory basis, the compensation of our named executive officers;
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4.
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To approve an amendment to our Amended and Restated Certificate of Incorporation to eliminate supermajority voting requirements applicable
to special corporate actions; and
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To transact such other business as may properly come before the Annual Meeting or at any postponement or adjournment thereof.
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IMPORTANT NOTICE REGARDING THE AVAILABILITY
OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON [ ], 2021: The Proxy
Statement, enclosed proxy card and Annual Report on Form 10-K for the fiscal year ended December 31, 2020 are available at http://proxymaterial.acaciaresearch.com.
Our Board of Directors has established March 15,
2021 as the record date (the "Record Date") for the determination of stockholders entitled to notice of, and to vote at, the
Annual Meeting and at any postponement or adjournment thereof. Only stockholders of record at the close of business on the Record Date
are entitled to receive notice of and to vote at the Annual Meeting and any adjournment or postponement thereof.
Your vote is very important. Whether or not
you plan to attend the virtual Annual Meeting, it is important that your shares be represented and voted at the Annual Meeting. Therefore,
I urge you to complete, sign, date and promptly return the enclosed proxy card in the enclosed postage-paid envelope, even if you plan
to attend the virtual Annual Meeting. Returning your completed proxy will ensure your representation at the Annual Meeting. If you decide
to attend the virtual Annual Meeting and wish to change your proxy vote, you may do so automatically by voting at the virtual Annual Meeting
if your shares are held directly in your name as the stockholder of record.
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Sincerely,
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Clifford Press
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Chief Executive Officer
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New York, New York
April [ ], 2021
If you have any questions
or require any assistance with respect to voting your shares, please contact our proxy solicitor at the contact listed below:
Saratoga Proxy Consulting LLC
520 8th Avenue, 14th Floor
New York, NY 10018
(212) 257-1311
Stockholders Call Toll Free at: (888) 368-0379
Banks & Brokers may call: (212) 257-1311
Email: info@saratogaproxy.com
ACACIA RESEARCH CORPORATION
767 Third Avenue, Suite 620
New York, New York 10017
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PROXY STATEMENT
FOR THE VIRTUAL ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON [ ], 2021
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General
The enclosed proxy is solicited on behalf of the
Board of Directors (the “Board”) of Acacia Research Corporation (referred to herein as “we,” “us,”
“our,” "Acacia" and the “Company”) for use at our 2021 Annual Meeting of Stockholders (the “Annual
Meeting”) to be held on [ ], [ ], 2021 at [ ]:00 [ ].m., Eastern Time, and at any adjournment or postponement thereof. The Annual
Meeting will be held via a live webcast, which can be accessed on the Internet by visiting www.virtualshareholdermeeting.com/ACTG2021,
where you will be able to attend the Annual Meeting, submit questions and vote your shares electronically. Please refer to the section
of this Proxy Statement titled "Questions and Answers Regarding the Annual Meeting" for additional information on how
to attend the virtual Annual Meeting and vote your shares.
Only stockholders of record at the close of business
on March 15, 2021 (the "Record Date") are entitled to receive notice of and to vote at the Annual Meeting and any adjournment
or postponement thereof. These proxy solicitation materials and our Annual Report on Form 10-K for the fiscal year ended December 31,
2020, including audited financial statements, were mailed on or about April [ ], 2021 to all stockholders entitled to receive notice
of and to vote at the Annual Meeting. In addition, these proxy solicitation materials and our Annual Report on Form 10-K, are available
at http://proxymaterial.acaciaresearch.com.
Meet Our Board of Directors
Qualifications of Our Board
Our Board is comprised of actively engaged individuals
with diverse skills, experiences and backgrounds that contribute to the effective oversight of our Company. The Board believes these varied
qualifications help to inform and better oversee decisions regarding the Company’s long-term strategic growth.
The presentation below is a high-level summary
of our Board’s skills. For further information about each director, please see “Proposal No. 1: Election of Directors”
below.
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Intellectual Property and Financial Expertise
Breadth and depth of experience in the Company's business
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Diverse Characteristics
Gender Diversity
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Executive Experience
Executive experience, including serving as senior executive within
a complex organization
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Financial Reporting
Experience overseeing the presentation of financial results as well
as internal controls
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Marketing & Media
Experience overseeing internal and external communications and engagement
with stakeholders
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Public Company Experience
Experience as a board member of other publicly traded companies
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Risk Management
Experience overseeing complex risk management matters
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Strategic Planning
Experience driving the strategic direction and growth of an organization
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Committee Structure
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Audit Committee
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Compensation Committee
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Nominating and Governance Committee
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Strategic Committee
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Maureen O’Connell
(Independent)
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Clifford Press
(Chief Executive Officer)
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Alfred V. Tobia, Jr.
(President and Chief Investment Officer)
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Katharine Wolanyk
(Independent)
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Isaac T. Kohberg
(Independent)
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Jonathan Sagal
(Independent)
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Committee Chair
Committee Member
Leadership Structure
Our Board believes
it is in our Company’s best interests that the positions of Chairman and Chief Executive Officer
are separate, with Ms. O’Connell serving as our Chairman and Mr. Press serving as our Chief Executive Officer. Our Board believes
separating these roles promotes effective leadership, allowing our Chief Executive Officer to focus on the management of our day-to-day
business, while allowing our Chairman to focus on matters involving our Board and corporate governance.
Our Board does not currently have a lead independent
director. The Board has determined that this structure is the most effective leadership structure for our Company at this time. The Board
has determined that maintaining the independence of a majority of our directors helps maintain the Board’s independent oversight
of management. For more details regarding our leadership structure, please see “Proposal No. 1: Election of Directors –
Board Leadership Structure” below.
Questions and Answers Regarding the Annual Meeting
The following are some commonly asked questions
raised by our stockholders and answers to each of those questions.
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Q.
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When and where will the Annual
Meeting be held?
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A: You
are invited to attend the Annual Meeting on [ ], 2021, at [ ]:00
[ ].m., Eastern Time. The Annual Meeting will be conducted entirely online via a live webcast. Our stockholders may participate
in the Annual Meeting by visiting the following website: www.virtualshareholdermeeting.com/ACTG2021. You will need a 16-digit control
number to attend and participate in the live webcast of the Annual Meeting. Please refer to the questions titled "How can I vote
my shares at the Annual Meeting?" and "How can I vote my shares without attending the Annual Meeting?" for information
on obtaining your 16-digit control number.
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What may I vote on at the Annual
Meeting?
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A:
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At the Annual Meeting, stockholders will consider and vote upon the following matters:
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Proposal No. 1: The election of six directors to serve on our Board until the 2022 Annual Meeting of Stockholders or
until their respective successors are duly elected and qualified;
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Proposal No. 2: The ratification of the appointment of Grant Thornton LLP as our independent registered public accounting
firm for the fiscal year ending December 31, 2021; and
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Proposal No. 3: The approval, on a non-binding, advisory basis, of the compensation of our named executive officers,
as disclosed in this Proxy Statement;
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Proposal No. 4: The approval of an amendment to our Amended and Restated Certificate of Incorporation to eliminate supermajority
voting requirements applicable to special corporate actions.
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Stockholders may also be asked to consider and
vote upon such other matters as may properly come before the Annual Meeting or any adjournment or postponement thereof.
Q.
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How does the Board of Directors recommend that I vote on the proposals?
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A:
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The Board recommends that our stockholders vote “FOR” each of the proposals in this proxy by using the enclosed proxy card.
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Q: What is the difference between holding
shares as a Stockholder of Record and as a Beneficial Owner, and how does this affect my options for voting my shares at the Annual Meeting?
A: Most
of our stockholders hold their shares beneficially in “street name” through a broker, bank, or other nominee (“Beneficial
Owner”) rather than directly in their own name (“Stockholder of Record”). There are some distinctions between shares
held of record and shares owned beneficially, specifically:
Stockholder of Record: If your shares are
registered directly in your name with our transfer agent, Computershare Trust Company, N.A, you are considered the Stockholder of Record
with respect to those shares, and these proxy materials are being sent directly to you.
As a Stockholder of Record, you have the right
to vote by proxy or to vote electronically via live webcast at the Annual Meeting. To vote by proxy, we have enclosed a proxy card for
you to use, or you may vote by Internet or by telephone, as described in further detail below. Even if you plan to attend the virtual
Annual Meeting, we recommend that you vote by proxy in advance as described below so that your vote will be counted if you later decide
not to attend the virtual Annual Meeting.
Beneficial Owner: If your shares are held
in a stock brokerage account or by a broker, bank, or other nominee, you are considered the Beneficial Owner of shares held in street
name, and these proxy materials are being forwarded to you by your broker, bank, or other nominee, which is considered the Stockholder
of Record with respect to those shares.
As a Beneficial Owner, you have the right to direct
your broker, bank, or other nominee on how to vote the shares in your account, and you are also invited to attend the virtual Annual Meeting.
However, because you are not the Stockholder of Record, you may not vote these shares at the virtual Annual Meeting unless you request
and obtain a valid "legal proxy" or obtain a 16-digit control number from your broker, bank, or other nominee. Please refer
to the voting instructions provided to you by your broker, bank, or other nominee for instructions on the voting methods they offer.
Q.
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How can I vote my shares at the Annual Meeting?
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A: Shares held directly in your name as the Stockholder of Record
may be voted at the Annual Meeting virtually by live webcast. To vote at the Annual Meeting virtually by live webcast you must visit the
following website: www.virtualshareholdermeeting.com/ACTG2021. You will need the 16-digit control number included on your proxy card.
However, even if you plan to attend the Annual Meeting virtually, we recommend that you submit a proxy with respect to the voting of your
shares in advance as described below so that your vote will be counted if you later decide not to attend the Annual Meeting.
If you are the Beneficial Owner of your shares,
you may vote your shares at the virtual Annual Meeting only if you request and obtain a valid “legal proxy” or obtain a 16-digit
control number from your broker, bank, or other nominee.
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How can I vote my shares without attending the Annual Meeting?
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A: Whether or not you plan to attend the virtual Annual Meeting, it
is important that your shares be represented and voted at the virtual Annual Meeting. Whether you are a Stockholder of Record or a Beneficial
Owner, you may vote by proxy or submit a voting instruction form without attending the Annual Meeting.
Stockholder of Record: If you are a Stockholder
of Record, you may vote by proxy using the options below.
To vote by Internet, you will need the 16-digit
control number included on the enclosed proxy card. Internet voting is available 24 hours a day and will be accessible until 11:59 [ ].m.
Eastern Time on [ ], 2021 by visiting www.proxyvote.com and following the instructions.
To vote by telephone, you will need the
16-digit control number included on the enclosed proxy card. Telephone voting is available 24 hours a day and will be accessible until
11:59 [ ].m. Eastern Time on [ ], 2021 by calling 1 (800) 690-6903 and following the instructions.
To vote by mail, complete, sign, date and
promptly return the enclosed proxy card in the enclosed postage-paid envelope. In order to be effective, completed proxy cards must be
received by 11:59 [ ].m. Eastern Time on [ ], 2021.
Beneficial Owner. If you are a Beneficial
Owner, please refer to the voting instructions provided to you by your broker, bank or other nominee for details on how to submit a voting
instruction form.
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How can I submit a question at the Annual Meeting?
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A: This year’s stockholders question and answer session will
include questions submitted live during the virtual Annual Meeting. An online pre-meeting forum will be available to our stockholders
at www.proxyvote.com prior to the date of the Annual Meeting. By accessing this online forum, our stockholders will be able to vote, view
the Annual Meeting procedures, and obtain copies of proxy materials and our Annual Report on Form 10-K for the year ended December 31,
2020.
As part of the Annual Meeting, we will hold a live
question and answer session during which we intend to answer questions submitted during the meeting in accordance with the Annual Meeting
procedures which are pertinent to the Company and the meeting matters, as time permits. Questions may be submitted during the Annual Meeting
through www.virtualshareholdermeeting.com/ACTG2021. Questions and answers will be grouped by topic and substantially similar questions
will be grouped and answered once.
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What if I need technical assistance?
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A: We encourage you to access the Annual Meeting before it begins.
Online check-in will start shortly before the meeting on [ ], 2021. If you
encounter any difficulties accessing the virtual meeting during the check-in or meeting time, please call the technical support number
that will be posted on the Virtual Shareholder Meeting log in page.
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Can I change my vote or revoke
my proxy?
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A:
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Stockholder of Record: If you are the Stockholder of Record, you may revoke your proxy in any one of four ways:
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You may vote again by Internet or by telephone at a later time (prior to the deadline for Internet or telephone voting);
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You may submit a properly completed proxy card with a later date (prior to the deadline to vote by mail);
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You may send a written notice that you are revoking your proxy to Acacia Research Corporation, 4 Park Plaza, Suite 550, Irvine, California
92614, Attention: Secretary; or
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You may attend the virtual Annual Meeting and vote electronically via live webcast. However, attending the virtual Annual Meeting
will not, by itself, revoke your proxy or change your vote.
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Beneficial Owner: If you are a Beneficial
Owner, you may revoke your proxy by following the voting instructions provided to you by your broker, bank or other nominee.
If you have any questions or need assistance voting
your shares, please call Saratoga Proxy Consulting LLC at (212) 257-1311 or toll free at (888) 368-0379.
Q.
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Who will count the votes?
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A: A representative of Broadridge Financial Solutions, Inc. will
count the votes and act as the inspector of election.
Q.
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What does it mean if I get more than one proxy card or voting instruction form?
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Stockholder of Record: If you are a Stockholder
of Record with shares registered under different names, you will receive more than one set of proxy materials and more than one proxy
card. Please complete, sign, date and promptly return each proxy card in the enclosed postage-paid envelope provided or vote by Internet
or by telephone using the 16-digit control number on each enclosed proxy card to ensure that all of your shares are voted. If you would
like all of your shares to be registered in the same name and under the same address, please contact our transfer agent, Computershare
Trust Company, N.A. at (800) 962-4284.
Beneficial Owner: If you are a Beneficial
Owner with shares held in more than one account, you will receive more than one voting instruction form from your broker, bank or other
nominee. Please refer to the voting instructions provided to you by your broker, bank or other nominee for details on how to submit a
voting instruction form for each account in which your shares are held. If you would like all of your shares to be held in the same account
and under the same address, please contact your broker, bank or other nominee.
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Q.
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Who is entitled to vote at the
Annual Meeting?
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A: Only Stockholders of Record and Beneficial Owners as of the close
of business on the Record Date are entitled to receive notice of and to vote at the Annual Meeting and any adjournments or postponements
thereof.
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Q.
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How many shares am I entitled to
vote?
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A: As a Stockholder of Record or a Beneficial Owner, you may vote all
of the shares owned by you as of the close of business on the Record Date.
Q.
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How many votes may be cast?
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A: Each outstanding share of our common stock as of the Record Date
will be entitled to one vote on all matters brought before the Annual Meeting. Each outstanding share of our Series A Convertible Preferred
Stock (“Series A Preferred Stock”) will be entitled to the number of votes equal to the number of whole shares of common stock
into which such holder’s shares of Series A Preferred Stock could be converted on the Record Date. As of the Record Date, 49,279,453
shares of our common stock were issued and outstanding and eligible to vote at the Annual Meeting, and 350,000 shares of our Series A
Preferred Stock were issued and outstanding and entitled to 9,589,042 votes at the Annual Meeting, which number is equal to the number
of whole shares of common stock into which shares of Series A Preferred Stock could be converted on the Record Date without regard to
any limitations on conversion. Holders of Series A Preferred Stock are entitled to vote with the holders of our common stock as a single
class on all matters submitted to a vote of the holders of common stock.
Q.
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What constitutes a “quorum” at the Annual Meeting?
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A: The presence at the Annual Meeting, virtually (even if not voting)
or by proxy, of the holders of a majority in voting power of the shares of our capital stock issued and outstanding as of the close of
business on the Record Date will constitute a “quorum.” Abstentions and broker non-votes are each included for the purpose
of determining whether a quorum is present.
Q:
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What is the effect of abstentions and broker non-votes?
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A: Shares held by persons attending the virtual Annual Meeting
but not voting, and shares represented by proxies that reflect abstentions as to a particular proposal, will be counted as present at
the virtual Annual Meeting for purposes of determining the presence of a quorum. Abstentions are generally treated as shares present virtually
or represented by proxy and entitled to vote at the Annual Meeting.
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Election of Directors (Proposal No. 1): Because this is an uncontested election, the election of each director
nominee requires the affirmative vote of the majority of the votes cast with respect to such director by the shares of our capital stock
present virtually or represented by proxy and entitled to vote on the proposal at the Annual Meeting. Abstentions will have no effect
on this proposal.
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Ratification of the Appointment of Independent Registered Public Accounting Firm (Proposal No. 2): This proposal
requires the affirmative vote of a majority of the shares of our capital stock present virtually or represented by proxy and entitled
to vote on this proposal at the Annual Meeting, so abstentions on this proposal will have the same effect as a vote against this proposal.
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Non-Binding, Advisory Approval of the Compensation of our Named Executive Officers (Proposal No. 3): This proposal
requires the affirmative vote of a majority of the shares of our capital stock present virtually or represented by proxy and entitled
to vote on this proposal at the Annual Meeting, so abstentions on this proposal will have the same effect as a vote against this proposal.
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Approval of an amendment to our Amended and Restated Certificate of Incorporation to eliminate supermajority voting requirements
applicable to special corporate actions (Proposal No. 4): The approval of Proposal No. 4, regarding an amendment to our
Amended and Restated Certificate of Incorporation requires the affirmative vote of 66 and 2/3 percent of the voting power of our capital
stock entitled to vote on this proposal. Abstentions will have the same effect as votes against the proposal.
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A broker non-vote occurs when a bank, broker or other nominee holding
shares for a Beneficial Owner has not received instructions from the Beneficial Owner regarding the voting of the shares and does not
have discretionary authority to vote the shares for certain non-routine matters. Shares represented by proxies that reflect a broker non-vote
will be counted for purposes of determining the presence of a quorum.
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Election of Directors (Proposal No. 1): This proposal is considered a non-routine matter and broker non-votes,
if any, will have no effect on the result of the vote on this proposal.
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Ratification of the Appointment of Independent Registered Public Accounting Firm (Proposal No. 2): This proposal
is considered a routine matter on which a bank, broker or other nominee generally has discretionary authority to vote, so we do not expect
any broker non-votes in connection with this proposal.
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Non-Binding, Advisory Approval of the Compensation of our Named Executive Officers (Proposal No. 3): This proposal
is considered a non-routine matter and broker non-votes, if any, will have no effect on the result of the vote on this proposal.
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Approval of an amendment to our Amended and Restated Certificate of Incorporation to eliminate supermajority voting requirements
applicable to special corporate actions (Proposal No. 4): This proposal is considered a non-routine matter and broker non-votes,
if any, will have the same effect as votes against the proposal.
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Q.
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What vote is required to approve each proposal?
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A: Election of Directors: Proposal No. 1. In an uncontested
election of directors, such as this election, each nominee for director must be elected by the affirmative vote of the majority of the
votes cast with respect to such director by the shares of our capital stock present virtually or represented by proxy and entitled to
vote. A "majority of votes cast" means that the number of votes "FOR" a director nominee must exceed the number of
votes "AGAINST" that director nominee. Broker non-votes and abstentions will have no effect on this proposal.
Ratification of Independent Registered Public
Accounting Firm: Proposal No. 2. The approval of Proposal No. 2, ratifying the appointment of Grant Thornton LLP as our independent
registered public accounting firm for the fiscal year ending December 31, 2021, requires the affirmative vote of a majority of the
outstanding shares of our capital stock present virtually or by proxy at the Annual Meeting and entitled to vote on the proposal. Because
the ratification of the independent registered public accounting firm is a routine matter, we do not anticipate receiving any broker non-votes
for this proposal. Abstentions will have the same effect as votes against this proposal.
Non-binding, Advisory Vote on the Compensation
of Our Named Executive Officers: Proposal No. 3. The approval of Proposal No. 3, regarding the compensation of our named executive
officers, requires the affirmative vote of a majority of the outstanding shares of our capital stock present virtually or by proxy at
the Annual Meeting and entitled to vote on the proposal. Abstentions will have the same effect as votes against this proposal. Broker
non-votes will have no effect on this proposal.
Approval of an amendment to our Amended and
Restated Certificate of Incorporation to eliminate supermajority voting requirements applicable to special corporate actions: Proposal
No. 4. The approval of Proposal No. 3, regarding an amendment to our Amended and Restated Certificate of Incorporation requires
the affirmative vote of 66 and 2/3 percent of the voting power of our capital stock entitled to vote on this proposal. Abstentions and
broker non-votes will have the same effect as votes against the proposal.
Q.
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How will voting on any other matters be conducted?
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A: Although we do not know of any matters to be considered at the
Annual Meeting other than the proposals described in this Proxy Statement, if any other matters are properly presented at the Annual Meeting,
your properly submitted proxy gives authority to the proxy holders, Clifford Press and Alfred V. Tobia, Jr., to vote on such matters at
their discretion.
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Q.
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Who are the largest principal stockholders?
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A: For information regarding holders of more than 5% of the outstanding
shares of our common stock or Series A Preferred Stock, see “Security Ownership of Certain Beneficial Owners and Management”
beginning on page 26 of this Proxy Statement.
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Q.
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Who will bear the cost of this
solicitation?
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A: We will bear the entire cost of this solicitation. We will reimburse
brokerage firms and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses incurred in sending proxies
and proxy solicitation materials to our stockholders. Proxies may also be solicited in person, by telephone, or by facsimile by our directors,
officers and certain of our regular employees, without additional compensation. We have retained Saratoga Proxy Consulting, LLC, a proxy
solicitation firm, to perform various solicitation services. We will pay Saratoga Proxy Consulting, LLC a fee of $12,500 plus phone and
other related expenses, in connection with their solicitation services.
Q.
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Where can I find the voting results of the Annual Meeting?
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A: We will announce preliminary voting results at the Annual Meeting
and will publish final results in a Current Report on Form 8-K that we expect to file with the Securities and Exchange Commission (the
"SEC") within four business days of the Annual Meeting. If final voting results are not available to us in time to file a Form
8-K with the SEC within four business days after the Annual Meeting, we intend to file a Form 8-K to disclose preliminary voting results
and, within four business days after the final results are known, we will file an additional Form 8-K with the SEC to disclose the final
voting results.
Q.
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Who can answer my questions?
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A: Your vote at this year's Annual Meeting is important, no matter
how many or how few shares you own. Please complete, sign, date and promptly return the enclosed proxy card in the enclosed postage-paid
envelope promptly or vote by Internet or telephone as set forth above. If you have any questions, require assistance in submitting a proxy
for your shares, or would like to request a copy of the proxy materials, please call Saratoga Proxy Consulting, LLC, the proxy solicitation
firm assisting us in the solicitation of proxies:
Saratoga Proxy Consulting LLC
520 8th Avenue, 14th Floor
New York, NY 10018
(212) 257-1311
Stockholders Call Toll Free at: (888) 368-0379
Banks & Brokers may call: (212) 257-1311
Email: info@saratogaproxy.com
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
PROPOSAL NO. 1:
ELECTION OF DIRECTORS
General
Our Bylaws provide that the number of directors
shall be set by the Board, but in any case, shall not be less than five and not more than nine. The Board has set the current number
of directors at six. At each Annual Meeting of Stockholders, the successors of each of our directors are elected to hold office for a
term expiring at the next Annual Meeting of Stockholders or until his or her successor is duly elected and qualified.
The Board, on the recommendation of the Nominating
and Governance Committee, has nominated Maureen O'Connell, Katharine Wolanyk, Isaac T. Kohlberg, Jonathan Sagal, Clifford Press and Alfred
V. Tobia, Jr. for election at the Annual Meeting to serve as directors for a term of office expiring at our 2022 Annual Meeting of Stockholders.
Mses. O'Connell and Wolanyk and Messrs. Kohlberg, Sagal, Press and Tobia have agreed to serve on the Board if elected, and management
has no reason to believe that any of them will be unavailable for service. If any of them are unable or decline to serve as directors
at the time of the Annual Meeting, the proxies will be voted for such other nominees as may be designated by the present Board.
Majority Vote Standard
Our Bylaws require that each director be elected
by the affirmative vote of a majority of the votes cast with respect to such director in uncontested elections such as this one (the number
of shares cast "for" a nominee's election exceeds the number of votes cast "against" that nominee). In a contested
election, the standard for election of directors is the affirmative vote of a plurality of the votes cast. A contested election is one
in which the Board has determined that the number of nominees exceeds the number of directors to be elected at the meeting.
In accordance with our Bylaws, a nominee who does
not receive the affirmative vote of a majority of the votes cast shall tender a written offer to resign to the Board within five business
days of the certification of the stockholder vote. The Nominating and Governance Committee shall promptly consider the resignation offer
and recommend to the full Board whether to accept the resignation. The Board will act on the Nominating and Governance Committee's recommendation
within 90 calendar days following certification of the stockholder vote. Thereafter, the Board will promptly disclose its decision whether
to accept the director's resignation offer and the reasons for rejecting the resignation offer, if applicable, in a current report on
Form 8-K to be filed with the SEC within four business days of the Board's determination. Any director who tenders his or her resignation
pursuant to this provision shall not participate in the Nominating and Governance Committee recommendation or Board action regarding whether
to accept the resignation offer.
Required Vote
If a quorum is present and voting, each nominee
for director for whom the number of shares cast "for" such nominee's election exceeds the number of votes cast "against"
that nominee will be elected to the Board. This proposal is considered a non-routine matter under applicable rules. Accordingly, a broker,
bank or other nominee may not vote without instructions on this matter, so there may be broker non-votes in connection with this proposal.
Abstentions and broker non-votes will have no effect on this proposal.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT OUR STOCKHOLDERS VOTE “FOR” EACH OF THE NOMINEES NAMED HEREIN. PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN ACCORDANCE
WITH THE BOARD'S RECOMMENDATION UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY.
The following table sets forth information as to the persons
who currently serve as our directors.
Name
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Age
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Director Since
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Positions with the Company
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Maureen O'Connell*+
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59
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2019
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Director
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Clifford Press#
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67
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2018
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Director
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Alfred V. Tobia, Jr.#
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56
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2018
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Director
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Katharine Wolanyk*+^
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57
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2019
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Director
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Isaac T. Kohlberg*^+
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68
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2019
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Director
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Jonathan Sagal^#
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39
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2019
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Director
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____________________
* Member of the Audit Committee
+ Member of the Compensation Committee
^ Member of the Nominating and Governance Committee
# Member of the Strategic Committee
Directors are to be elected at the Annual Meeting.
Biographical information regarding the nominees for election as a director and each other person whose term of office as a director will
continue after the Annual Meeting is set forth below.
Information Regarding the Director Nominees
Maureen O’Connell has
served as a director since January 2019. Prior to joining Acacia, Ms. O'Connell briefly provided consulting services to the Company
from September 2018 to November 2018. Ms. O’Connell is a global business executive, CFO and board director recognized for
significant value creation through strategic thinking and action at numerous public companies. She has held executive leadership
and board positions in a variety of industries including media, education, digital, retail, technology, professional services,
biotech, pharma, homebuilding, real estate and insurance. She has chaired the Audit Committee, served on the Transaction and Nominating
Committees, and served as the designated financial expert for Fortune 500 and high growth public companies listed on NYSE and
NASDAQ. In addition, Ms. O’Connell is a certified public accountant and has been in good standing since 1987. Ms. O’Connell
is also recognized for her extensive M&A experience and her strength in operations and technology. In June 2020, Ms. O’Connell
was appointed to the Board of ISACA, a non-profit global technology association with more than 145,000 members and 233 chapters
in 188 countries that has provided world-class learning, membership, and enterprise services for more than 50 years. Ms. O’Connell
served on the Board of Harte Hanks (NYSE: HHS) from June 2018 to August 2020. Ms. O’Connell was also a member of the Audit
Committee and served as chairman of the Compensation Committee of Harte Hanks. Ms. O’Connell served on the Board of Sucampo
Pharmaceuticals Inc. (NASDAQ: SCMP), a fast growth biotech company, from 2013 to 2018. She played a key role in its sale to Mallinckrodt
Plc for $1.2 billion in February 2018. From 2007 to 2017, Ms. O'Connell has served as Executive Vice President, Chief Administrative
Officer and Chief Financial Officer of Scholastic, Inc., a well-known publisher and distributor of children's books and a leading
company in educational technology and children's media. From 2002 to 2007, Ms. O’Connell served on the Board of Beazer Homes
(NYSE: BZH), a Fortune 500 homebuilder. Initially, Ms. O’Connell served on the Audit and Compensation Committees of Beazer
Homes and in 2003 was named Audit Chair. We believe that Ms. O’Connell’s financial expertise and extensive financial
experience at public companies make her qualified to serve on the Board.
Katharine Wolanyk has served as a
director since January 2019. Ms. Wolanyk is a Managing Director at Burford Capital, LLC, where she leads the Chicago office as well as
Burford’s intellectual property (“IP”) business. Ms. Wolanyk’s career spans the business, legal and engineering
arenas, with a particular focus in IP. She was named a World’s Leading IP Strategist by Intellectual Asset Management (IAM) in 2015
through 2018 and writes and speaks frequently on IP issues. Prior to joining Burford, Ms. Wolanyk was President, Chief Legal Officer and
a Board member of Soverain Software, an enterprise software company whose patent portfolio has been licensed extensively in the software
and Internet retailing industries. Ms. Wolanyk also was IP counsel to Terremark Worldwide, Inc., a publicly traded IT solutions firm,
General Counsel of Data Return LLC, a managed hosting provider, Senior Vice President of corporate development at Divine, Inc., a publicly
traded enterprise software company a corporate attorney at Latham & Watkins LLP, and a systems engineer at Hughes Aircraft Company.
Ms. Wolanyk earned her JD from the University of Chicago Law School, and a BS in engineering from Michigan State University. She has served
on the University of Chicago Law School Visiting Committee and on the Board of Managers of the YMCA of Metropolitan Chicago. We believe
that Ms. Wolanyk’s extensive business experience and IP expertise make her qualified to serve on the Board.
Isaac T. Kohlberg has served as a
director since May 2019. Mr. Kohlberg has had a distinguished career protecting and commercializing IP for leading universities and research
institutions. He currently is a Senior Associate Provost and Chief Technology Development Officer at Harvard University, where he is responsible
for the strategic management and commercial development of all technologies and IP arising from Harvard's research enterprise. Mr. Kohlberg's
role at Harvard University includes industry liaising and outreach, IP Management, business development, technology commercialization
and the formation of startup companies and new ventures around Harvard technology platforms. In tandem, he is also responsible for generating,
structuring, and negotiating research alliances and collaborations with industry and generating industry-sponsored research funding for
Harvard faculty. Prior to joining Harvard in 2005, Mr. Kohlberg was the CEO of Tel Aviv University's Economic Corporation and head of
Ramot, its technology transfer organization. Prior to his role at Ramot, Mr. Kohlberg held various roles at New York University ("NYU"),
including Vice Provost, Vice President for Industrial Liaison (NYU's technology transfer program) and headed the Office of Science and
Technology Administration at NYU School of Medicine. During his time at NYU, the institution entered into a major licensing agreement
to develop Remicade, a humanized monoclonal antibody used in treatment of Crohn's Disease and other autoimmune diseases, which led to
one of the largest royalty revenue streams generated by any university worldwide. Before joining NYU in 1989, Mr. Kohlberg was the CEO
of YEDA, the commercial arm of the Weizmann Institute of Science in Israel. While at YEDA, Mr. Kohlberg negotiated and concluded major
royalty-bearing license agreements. A few examples are an agreement with Teva Pharmaceutical Industries Ltd regarding Copaxone, which
Teva Pharmaceuticals markets as a proprietary treatment for relapsing/remitting multiple sclerosis, and an agreement with the broadcasting
encryption company NDS Group. Mr. Kohlberg has served as a Director at Anchiano Therapeutics Ltd (TLV: ANCN, NASDAQ: ANCN), a pivotal-stage
biopharmaceutical company, since 2017 and as a Director at Clal Biotechnology Industries Ltd. (TLV: CBI), a life sciences investment company,
since 2015. Mr. Kohlberg received his MBA from Institut Européen d'Administration des Affaires and LLB from Tel Aviv University.
He also received a diploma in French culture and historical studies from the University of Strasbourg. We believe Mr. Kohlberg’s
long-term experience in IP commercialization and development makes him qualified to serve on the Board.
Jonathan Sagal is a Managing Director
at Starboard Value LP, a New York-based investment advisor with a focused and fundamental approach to investing primarily in publicly
traded U.S. companies. Prior to joining Starboard Value in June 2011, Mr. Sagal was an investment analyst at Casablanca Capital, an investment
firm focused on shareholder activism. Previously, he was an investment analyst at Mill Road Capital, where he focused on long-term public
and private equity investments in microcap companies, and Prentice Capital Management, where he focused on investments in consumer and
retail companies. Prior to Prentice, he was an Investment Banking Analyst at the Mergers & Acquisitions group at Rothschild Inc. Mr.
Sagal received an M.B.A. from Columbia Business School and graduated from Princeton University, where he received an A.B., summa cum laude,
in Philosophy. We believe that Mr. Sagal’s extensive financial background and investment experience makes him qualified to serve
on the Board.
Clifford Press
has been a Managing Member of OPP, LLC, and its predecessor firm, Oliver Press Partners, LLC, an investment advisory firm since March
2005. Mr. Press currently serves as the Chief Executive Officer of Acacia Research Corporation (NASDAQ: ACTG), a position he has held
since September 2019, and has served as a director of Acacia since June 2018. From 1986 to March 2003, Mr. Press served as a General Partner
of Hyde Park Holdings, Inc., a private equity investment firm that he co-founded. From April 2016 to October 2019, Mr. Press served as
a director of Quantum Corporation (OTC: QMCO), a provider of data storage solutions. From October 2016 until June 2018, Mr. Press served
as a director of Stewart Information Services Corporation (NYSE: STC), a real estate information, title insurance and transaction management
company. From March 2008 to November 2009, Mr. Press served as a director of Coherent Inc. (NASDAQ: COHR), a manufacturer of laser-based
photonic products. From December 2011 until the company was acquired in February 2013, Mr. Press served as a director of SeaBright Holdings,
Inc. (formerly NYSE: SBX), a specialty provider of multi-jurisdictional workers’ compensation insurance. From 2001 to June 2011,
Mr. Press served as a director of GM Network Ltd., a private holding company providing Internet-based digital currency services. Mr. Press
received his MA degree from Oxford University and an MBA degree from Harvard Business School. We believe that Mr. Press’s financial
expertise and over 25 years of experience investing in a broad range of public and private companies, together with his extensive governance
oriented public company board experience, makes him well qualified to serve on the Board.
Alfred V. Tobia, Jr. has served as
a director since June 2018. Mr. Tobia is currently Chairman of the Board and Chairman of the Nomination and Governance Committee
of Harte Hanks. Mr. Tobia co-founded Sidus Investment Management, LLC in 2000, overseeing the management of the Sidus equity funds
and providing analysis to the firm’s credit fund until 2018. Mr. Tobia was previously a Senior Managing Director and Supervisory
Analyst (1996 to 2000) within the data networking and telecommunication equipment sectors at Banc of America Securities (formerly Montgomery).
From 1992 to 1996, he was a Senior Analyst at Wertheim Schroeder & Co., focusing on PC and entertainment software, data networking
and special situations. Prior to that, Mr. Tobia was an analyst at Mabon Nugent & Co. (1986 to 1992), covering various sectors of
technology. Mr. Tobia graduated in 1986 from Lafayette College with an AB in Engineering with a concentration in Computer Science.
Mr. Tobia has extensive financial experience in both public and private companies and executive experience through the management
of a small-cap investment fund. Mr. Tobia’s background and insights provide valuable expertise in corporate finance, strategic planning,
and capital and credit markets. We believe Mr. Tobia’s extensive financial experience, and his executive and management experience
make him qualified to serve on the Board.
Director Independence
Our common stock is listed
on The Nasdaq Global Select Market and, therefore, we are subject to the listing requirements of that market. In addition, our corporate
governance guidelines require that at least two-thirds of the members of the Board meet the independence requirements of the Nasdaq Stock
Market. The Board, with the assistance of outside counsel, reviews the professional relationships of potential and current directors,
and has determined that Messrs. Kohlberg and Sagal and Mses. O’Connell and Wolanyk, constituting a majority of our directors, are
“independent” as defined in the Listing Rules of The Nasdaq Stock Market.
In addition, Mr. Sagal was appointed in connection with a Governance
Agreement, dated as of November 18, 2019 and amended on January 7, 2020, by and among the Company and the entities and natural persons
set forth on the signature pages thereto (the "Governance Agreement"). No company or organization that Mr. Sagal has worked
at is a parent, subsidiary, or other affiliate of the Company. For more information regarding the Governance Agreement, please see "Director
Qualification Standards - Contractual Rights of Starboard Value to Designate Nominees."
Board Leadership Structure
Our Bylaws provide the Board with flexibility to
combine or separate the positions of Chairman and Chief Executive Officer in accordance with its determination that utilizing one or the
other structure is in the best interests of our Company. Currently, the positions of Chairman and Chief Executive Officer are separate,
with Ms. O’Connell serving as our Chairman and Mr. Press serving as our Chief Executive Officer. Our Board believes separating these
roles promotes effective leadership, allowing our Chief Executive Officer to focus on the management of our day-to-day business, while
allowing our Chairman to focus on matters involving our Board and corporate governance.
The Board does not currently have a lead independent
director. The Board has determined that this structure is the most effective leadership structure for our Company at this time. The Board
has determined that maintaining the independence of a majority of our directors helps maintain the Board’s independent oversight
of management. In addition, our Audit, Compensation and Nominating and Governance Committees, which oversee critical matters such as our
accounting principles, financial reporting practices and system of disclosure controls and internal controls over financial reporting,
our executive compensation program and the selection and evaluation of our directors and director nominees, each consist entirely of independent
directors.
Risk Oversight
The Board is actively involved in the oversight
of risks, including credit, liquidity, operational, legal and regulatory, information technology, cybersecurity, data privacy and reputational
risks that could affect our business. The Board does not have a standing risk management committee but administers this oversight function
directly through the Board as a whole, as well as through committees of the Board. For example, the Audit Committee assists the Board
in its risk oversight function by reviewing and discussing with management our accounting principles, financial reporting practices and
system of disclosure controls and internal controls over financial reporting. The Nominating and Governance Committee assists the Board
in its risk oversight function by periodically reviewing and discussing with management important corporate governance principles and
practices and by considering risks related to our director nominee evaluation process. The Compensation Committee assists the Board in
its risk oversight function by considering risks relating to the design of our executive compensation programs and arrangements. The full
Board considers strategic risks and opportunities and receives reports from the committees regarding risk oversight in their areas of
responsibility as necessary. We believe the Board leadership structure facilitates the division of risk management oversight responsibilities
among the Board committees and enhances the Board’s efficiency in fulfilling its oversight function with respect to different areas
of our business risks and our risk mitigation practices.
Board Meetings and Committees
The Board held a total of thirty meetings and committees
of the Board held a total of seventeen meetings during the fiscal year ended December 31, 2020. During that period, no incumbent
director attended fewer than 75% of the sum of the total number of meetings of the Board and the total number of meetings of all committees
of the Board on which that director served. The Board has an Audit Committee, a Compensation Committee, a Nominating and Governance Committee,
an Investment Committee and a Strategic Committee. In 2020, the Board adopted amended charters for the Audit Committee, the Compensation
Committee and the Nominating and Governance Committee, each of which may be viewed on our website at www.acaciaresearch.com.
Audit Committee. The Audit Committee
currently consists of Mr. Kohlberg and Mses. O’Connell and Wolanyk, each of whom is independent under the listing standards of the
Nasdaq Stock Market. Ms. O’Connell currently serves as the Chairman of the Audit Committee. The Audit Committee held seven meetings
during the fiscal year ended December 31, 2020.
The Audit Committee is responsible for retaining,
evaluating and, if appropriate, recommending the termination of our independent registered public accounting firm and is primarily responsible
for approving the services performed by our independent registered public accounting firm and for reviewing and evaluating our accounting
principles, financial reporting practices and system of internal accounting controls. The Audit Committee is also responsible for maintaining
communication between the Board and our independent registered public accounting firm.
The Board has determined that Ms. O’Connell
is an “audit committee financial expert,” as defined by Item 407(d)(5)(ii) of Regulation S-K.
Compensation Committee. The
Compensation Committee currently consists of Mr. Kohlberg and Mses. Wolanyk and O’Connell, each of whom is independent under the
listing standards of the Nasdaq Stock Market. Mr. Kohlberg currently serves as the Chairman of the Compensation Committee. The Compensation
Committee held five meetings during the fiscal year ended December 31, 2020.
Our executive compensation program is administered
by the Compensation Committee. The Compensation Committee is responsible for approving the compensation package of each executive officer
and recommending it to the Board as well as administering our equity compensation plans. In making decisions regarding executive compensation,
the Compensation Committee considers many factors including recommendations from our compensation advisory firm, evaluation of our peer
group, the input of our management and other directors. In addition, the Compensation Committee establishes compensation programs that
do not encourage excessive risk taking by our named executive officers and we have determined that it is not reasonably likely that our
compensation and benefit plans and policies would have a material adverse effect on our company.
For more information on the responsibilities and
activities of the Compensation Committee see “Executive Compensation and Related Information” beginning on page 29 of this
Proxy Statement.
Nominating and Governance Committee.
The Nominating and Governance Committee currently consists of Ms. Wolanyk and Messrs. Kohlberg and Sagal, each of whom is independent
under the listing standards of the Nasdaq Stock Market. Ms. Wolanyk currently serves as the Chairman of the Nominating and Governance
Committee. The Nominating and Governance Committee held five meetings during the fiscal year ended December 31, 2020. The Nominating
and Governance Committee recommended director nominees to the Board for election at the Annual Meeting. The charter for the Nominating
and Governance Committee provides that, among its specific responsibilities, the Committee shall:
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Establish criteria and qualifications for Board membership, including standards for assessing independence;
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Identify and consider candidates, including those recommended by stockholders and others, to fill positions on the Board, and assess
the contributions and independence of incumbent directors in determining whether to recommend them for reelection to the Board;
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Recommend to the Board candidates for election or reelection at each annual meeting of stockholders;
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Annually review our corporate governance processes, and our governance principles, including such issues as the Board’s organization,
membership terms, and the structure and frequency of Board meetings, and recommend appropriate changes to the Board;
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Administer our corporate Codes of Conduct and annually review and assess the adequacy of the corporate Codes of Conduct and recommend
any proposed changes to the Board. Specifically, the Nominating and Governance Committee shall discuss with management its compliance
with the corporate Codes of Conduct, including any insider and affiliated party transactions, and our procedures to monitor compliance
with the corporate Codes of Conduct;
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Review periodically with our Chief Executive Officer and the Board, the succession plans relating to positions held by senior executives,
and make recommendations to the Board regarding the selections of individuals to fill these positions;
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Oversee the continuing education of existing directors and the orientation of new directors;
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Monitor the functions of the Board and its committees, as set forth in their respective charters, and coordinate and oversee annual
evaluations of the Board’s performance and procedures, including an evaluation of individual directors, and of the Board’s
committees;
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Review and discuss with management disclosure of the Company's corporate governance practices, director independence and the director
nominations process, and recommend that this disclosure be included in the Company's proxy statement or annual report on Form 10-K, as
applicable; and
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Assess annually the performance of the duties specified in the Nominating and Governance Committee Charter by the Nominating and Governance
Committee and its individual members.
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Strategic Committee. The Strategic
Committee was established on November 14, 2019 in connection with the Governance Agreement. The Strategic Committee is tasked with, among
other things, sourcing and performing due diligence on potential acquisition targets and intellectual property or other investment opportunities,
with the goal of finding one or more strategic investments in connection with the Securities Purchase Agreement dated November 18, 2019
(the “Securities Purchase Agreement”), by and among the Company and certain funds and accounts affiliated with, or managed
by, Starboard Value (collectively, “Starboard”). The members of the Strategic Committee are Clifford Press, Alfred V. Tobia,
Jr. and Jonathan Sagal. Mr. Press currently serves as the Chairman of the Strategic Committee.
For more information regarding the Governance Agreement
and the Securities Purchase Agreement, please see "Director Qualification Standards - Contractual Rights of Starboard Value to
Designate Nominees."
Director Qualification Standards
There are no specific minimum qualifications that
the Nominating and Governance Committee requires to be met by a director nominee recommended for a position on the Board, nor are there
any specific qualities or skills that are necessary for one or more members of our Board to possess, other than as are necessary to meet
the requirements of the rules and regulations applicable to us. The Nominating and Governance Committee considers a potential candidate’s
experience, areas of expertise, and other factors relative to the overall composition of the Board, including the following characteristics:
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the highest ethical standards and integrity;
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a willingness to act on and be accountable for Board decisions;
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an ability to provide wise, informed, and thoughtful counsel to top management on a range of issues;
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a history of achievement that reflects high standards for the director candidate and others;
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loyalty and commitment to driving our success;
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the independence requirements imposed by the SEC and the Nasdaq Stock Market; and
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a background that provides a portfolio of experience, qualifications, attributes, skills and knowledge commensurate with our needs.
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In addition, our corporate governance guidelines
provide that the Nominating and Governance Committee will consider the diversity of business experience or other background characteristics
of members of the Board. Examples of this include management experience, financial expertise and educational background. The Nominating
and Governance Committee and the Board believe that a diverse board leads to improved performance by encouraging new ideas, expanding
the knowledge base available to management and other directors and fostering a culture that promotes innovation and vigorous deliberation.
As of December 31, 2020, one third of our directors were women. We continue to work to cultivate an inclusive working environment and
improve board diversity.
The Nominating and Governance Committee has the
following policy with regard to the consideration of any director candidates recommended by security holders:
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A stockholder wishing to nominate a candidate for election to the Board at the next annual meeting is
required to give written notice addressed to the Corporate Secretary, Acacia Research Corporation, 4 Park Plaza, Suite 550, Irvine, California
92614, of his or her intention to make such a nomination. The notice of nomination must have been received by the Secretary at the address
below no earlier than the close of business on January 12, 2022 and no later than the close of business on February 11, 2022,
in accordance with our Bylaws, in order to be considered for nomination at the next annual meeting.
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The notice of nomination must include information regarding the recommended candidate relevant to a determination
of whether the recommended candidate would be barred from being considered independent under the Nasdaq Stock Market’s Listing Qualifications
or, alternatively, a statement that the recommended candidate would not be so barred. A nomination which does not comply with the above
requirements will not be considered.
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The Nominating and Governance Committee considers
director candidates that are suggested by members of the Nominating and Governance Committee and the full Board, as well as management
and stockholders. The Nominating and Governance Committee may, in the future, also retain a third-party executive search firm to identify
candidates on terms and conditions acceptable to the Nominating and Governance Committee, in its sole discretion. The process by the Nominating
and Governance Committee for identifying and evaluating nominees for director, including nominees recommended by stockholders, involves
(with or without the assistance of a retained search firm), compiling names of potentially eligible candidates, conducting background
and reference checks, conducting interviews with the candidate and others (as schedules permit), meeting to consider and approve the final
candidates and, as appropriate, preparing and presenting to the full Board an analysis with regard to particular recommended candidates.
The Nominating and Governance Committee endeavors to identify director nominees who have the highest personal and professional integrity,
have demonstrated exceptional ability and judgment, and, together with other director nominees and members, are expected to serve the
long-term interest of our stockholders and contribute to our overall corporate goals.
Contractual Rights of Starboard Value to
Designate Nominees. In 2019, the Board began a process to evaluate a wide range of strategic options with the goal of maximizing
value for all stockholders and serving the best interests of the Company’s stakeholders. As a result of this strategic review, on
November 18, 2019, the Company entered into the Securities Purchase Agreement with Starboard pursuant to which Starboard made a $35 million
strategic investment in the Company’s Series A Preferred Stock.
As part of that investment, the Board granted to
Starboard certain rights related to the Company’s corporate governance, including director designation rights. Pursuant to the Governance
Agreement, the Company agreed to nominate and appoint Jonathan Sagal (the “Initial Appointee”) Subject to certain limitations
set forth in the Governance Agreement, during the Governance Period (as defined below), the Company agreed that (i) Mr. Sagal would be
a member of the Nominating and Governance Committee, and (ii) Starboard has the right to recommend two additional director nominees to
the Board (together with the Initial Appointee, the “Starboard Appointees”).
If there is a vacancy on the Board during the Governance
Period as a result of any Starboard Appointee no longer serving on the Board for any reason, then Starboard will be entitled to designate
a replacement thereof (each a “Replacement Director”); provided that at such time certain criteria set forth in the Governance
Agreement are satisfied, including that Starboard satisfy a minimum ownership threshold. Prior to being appointed to the Board, the Starboard
Appointee (or a Replacement Director thereof) is required to deliver an irrevocable resignation letter pursuant to which he or she will
resign automatically and immediately if Starboard fails to satisfy the minimum ownership threshold. Mr. Sagal delivered this resignation
letter to the Board prior to his appointment.
The Company agreed that, without the prior written
consent of Starboard, the Board will take all necessary action so that the size of the Board will not exceed seven directors during the
period from November 18, 2019 until the end of the Governance Period.
Pursuant to the Governance Agreement, the Board
agreed to nominate, recommend, support and solicit proxies for Jonathan Sagal, the Initial Appointee, for election at the 2020 annual
meeting of stockholders for a term expiring at the Annual Meeting. In addition, during the Governance Period, Starboard has agreed not
to (i) nominate or recommend for nomination any person for election as a director at any stockholder meeting, (ii) submit any stockholder
proposals for consideration at, or bring any business before, any stockholder meeting or (iii) initiate, encourage or participate in any
“vote no,” “withhold” or similar campaign with respect to the Company’s common stock.
Starboard agreed, from the date of the Governance
Agreement until the earlier of (i) the date that is 15 days prior to the deadline for the submission of stockholder nominations for the
Company’s 2020 annual meeting of stockholders pursuant to the Company’s organizational documents and (ii) the date that is
100 days prior to the first anniversary of the Company’s 2019 annual meeting of stockholders (the “Governance Period”),
to customary standstill restrictions. Starboard has an option to extend the Governance Period by one-year periods, subject to certain
limitations, and has exercised this option such that the Governance Period is now extended until the earlier of (x) the date that is 15
business days prior to the deadline for the submission of stockholder nominations for the Company’s 2022 annual meeting of stockholders
pursuant to the Company’s organizational documents and (y) the date that is 100 days prior to the first anniversary of the Annual
Meeting. The Governance Agreement terminates upon the expiration of the Governance Period.
Codes of Conduct
The Code of Conduct for Employees and Directors
and corporate Code of Conduct for Chief Executive Officer and Other Senior Financial Officers may be viewed on our website at www.acaciaresearch.com.
The corporate Code of Conduct for Employees and Directors applies to all of our officers, directors and employees. The Code of Conduct
for Chief Executive Officer and Other Senior Financial Officers is an additional code that specifically applies to our principal executive
officer, principal financial officer and accounting officer and controller or persons performing similar functions. Any waiver of the
corporate Code of Conduct for Employees and Directors may be made only by the Board and must be promptly disclosed to stockholders in
the manner required by applicable law. Any waiver of the Code of Conduct for Chief Executive Officer and Other Senior Financial Officers
may be made only by the Audit Committee and must be promptly disclosed to stockholders in the manner required by applicable law.
[Environmental, Social, and Governance Matters
We are committed to environmental, social and governance
(“ESG”) matters at the Company and being a responsible corporate citizen. The Company continually reviews its mission, vision,
and values to fulfill its ESG commitments. We believe there is real value in sustainability. We have an eye on sustainability with every
business decision we make. Building sustainable, scalable programs, products and services and setting long-term goals for ESG performance,
including governance, inclusion, workplace policy and the environment. To that end:
|
•
|
Ethics & Compliance - We maintain Corporate Code of Conduct (“Code”), which is available on our website, at https://acaciaresearch.com/ACTG/corporate_governance.
This Code is the foundation of our high-level commitment to ensuring our officers, directors, and employees act at all times in an honest
and ethical manner in connection with their service to the Company.
|
|
•
|
Human Capital Management – We feel that people are the core of our business. Accordingly, we are committed to implementing an
inclusive, diverse team and culture. We seek to provide an engaging work experience that excites and motivates our people to deliver their
best.
|
|
•
|
Safety & Health - During COVID-19 we prioritized the safety of our employees. We have implemented remote work for employees, including
senior management. We have significantly reduced travel and contact to help protect not only our employees but also the communities in
which we live.
|
|
•
|
Culture – Most importantly, we focus on creating a respectful, rewarding, diverse, and inclusive work environment. Key to this
is welcoming employees of a diverse array of backgrounds and perspectives and a commitment to ensuring those employees are treated with
respect and dignity. We consider employee input in fostering our culture, establishing employee rewards and benefits, and building the
overall employee experience. We believe that driving a culture of inclusion that values and leverages the uniqueness and broad perspective
of each employee allows our employees to build meaningful careers and will ensure our success as a company]
|
Insider Trading Policy
Our corporate Insider Trading Policy may be viewed
on our website at www.acaciaresearch.com. The Insider Trading Policy applies to all of our officers, directors and employees, including
our principal executive officer, principal financial and accounting officer and controller, or persons performing similar functions.
[Clawback Policy
If we are required, as a result of misconduct,
to restate our financial results due to our material noncompliance with any financial reporting requirements under the federal securities
laws, our executive officers, including named executive officers, may be legally required to reimburse us for any bonus or other incentive-based
or equity-based compensation they received as a result of the material noncompliance.]
[Stock Ownership Guidelines
In 2021, our board of directors adopted Stock Ownership
Guidelines requiring that all directors and executive officers, including our named executive officers, own a significant ownership interest
in our common stock, subject to a phase-in period, in order to align their interests with those of our stockholders. The policy requires
that our directors and executive officers own equity as follows:
|
•
|
[ ]X
for the Chief Executive Officer and the President;
|
|
•
|
[ ]X
for all other employees with a “Chief” or “Executive Vice President” title and members of the board of directors;
and
|
|
•
|
[ ]X
for any other “executive officers” not addressed above.]
|
Stockholder Communications with Directors
Stockholders wishing to communicate with the Board
or with a particular member or committee of the Board should address communications to Maureen O’Connell, Chairman, Acacia Research
Corporation, c/o Jennifer Graff, Corporate Secretary, 4 Park Plaza, Suite 550, Irvine, California 92614. Our Corporate Secretary will
act as agent for the Chairman in facilitating such direct communications to the Board in accordance with our Policy Statement on Corporate
Communications to Investors and Media. From time to time, the Board may change the process through which stockholders communicate with
the Board or its members or committees. Please refer to our website at www.acaciaresearch.com for changes in this process.
Stockholder Engagement
We maintain an open and interactive dialogue with
our stockholders. Our relationship with our stockholders, as the owners of our Company, is an important part of our success and our management
team believes that active stockholder engagement is an important source of strategic and investment insight. Our stockholders' views are
shared with our Board, and incorporated in discussions of our strategy, operational performance, financial results, corporate governance,
compensation programs, and related matters.
Our management team is primarily responsible for
investor relations. Direct and open stockholder engagement drives increased corporate accountability, improves decision making, and ultimately
creates long-term value. Our management team provides regular updates to our Board regarding stockholder feedback.
[During 2020, we conducted an extensive stockholder
outreach effort which included reaching out to stockholders representing approximately [ ]% of our outstanding shares to solicit
their feedback and hear their views on the Company’s practices and policies as we evolve. Members of our management team,
including our Chief Executive Officer and Chief Investment Officer, participated in each of these conversations. In addition to
these conversations, we maintain ongoing dialogue with many of our investors through our investor relations program.]
We heard from stockholders that there is a strong
desire to keep executive salaries in-line with companies of our size and to reasonably reward positive performance as we evolve as a Company
and generate long-term value. Our board of directors has reviewed this feedback and incorporated it into the Company’s compensation
policies.
Board Member Attendance at Annual Stockholder Meetings
Although we do not have a formal policy regarding
director attendance at annual stockholder meetings, directors are expected to attend these meetings absent extenuating circumstances.
Five of our directors attended our 2020 annual meeting of stockholders.
2020 DIRECTOR COMPENSATION TABLE
The following table provides fiscal year 2020 compensation
information for our non-employee directors who served on the Board during 2020:
Current Members of the Board of Directors:
Name
|
|
Fees Earned or
Paid in
Cash
($)
|
|
|
Stock
Awards
($)
|
|
|
Option Awards
($) (1)
|
|
|
Non-Equity
Incentive Plan
Compen-
sation
($)
|
|
|
Change in
Pension
Value and Non-qualified
Deferred
Compensa-
tion
Earnings
($)
|
|
|
All Other
Compensation
($)
|
|
|
Total
($)
|
|
Maureen O'Connell
|
|
|
185,000
|
|
|
|
109,999
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
294,999
|
|
Katharine Wolanyk
|
|
|
95,000
|
|
|
|
109,999
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
204,999
|
|
Isaac T. Kohlberg
|
|
|
215,000
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
215,000
|
|
Jonathan Sagal
|
|
|
80,000
|
|
|
|
70,035
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
150,035
|
|
Prior Members of the Board of Directors:
Name
|
|
Fees
Earned
or
Paid in
Cash
($)
|
|
|
Stock
Awards
($)
|
|
|
Option Awards
($) (1)
|
|
|
Non-Equity
Incentive Plan
Compen-sation
($)
|
|
|
Change in
Pension
Value and Non-qualified
Deferred
Compen-sation
Earnings
($)
|
|
|
All Other
Compensation
($)(7)
|
|
|
Total
($)
|
|
Luis E. Rinaldini(2)
|
|
|
15,692
|
|
|
|
91,304
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
106,996
|
|
_________________________________________
(1)
|
Amounts shown represent the aggregate grant date fair value of stock option awards granted to the directors as determined pursuant to
ASC Topic 718, “Compensation - Stock Compensation,” or ASC Topic 718. The methodology used to calculate the value of stock
options is set forth under Note 2 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal
year ended December 31, 2020 filed with the SEC on March 29, 2021.
|
(2)
|
Mr. Rinaldini was appointed to the Board on May 6, 2019 and resigned from the Board on March 11, 2020.
|
PROPOSAL NO. 2:
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
Grant Thornton LLP, our independent registered
public accounting firm for the fiscal year ended December 31, 2020, was recommended by the Audit Committee, and approved by the Board,
to act in such capacity for the fiscal year ending December 31, 2021, subject to ratification by the stockholders.
If our stockholders do not ratify the selection
of Grant Thornton LLP, or if Grant Thornton LLP should decline to act or otherwise become incapable of acting as our independent registered
public accounting firm, or if our engagement of Grant Thornton LLP as our independent registered public accounting firm should be discontinued,
the Board, on the recommendation of the Audit Committee, will appoint a substitute independent registered public accounting firm. A representative
of Grant Thornton LLP is expected to be present at the virtual Annual Meeting, will be given the opportunity to make a statement if he
or she so desires and will be available to respond to appropriate questions from stockholders present virtually at the Annual Meeting.
Required Vote
The affirmative vote of the holders of a majority
of the outstanding shares of our capital stock present virtually or by proxy and entitled to vote at the Annual Meeting is required to
ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31,
2021. This proposal is considered a routine matter under applicable rules. A broker, bank or other nominee may generally vote without
instructions on this matter, so we do not expect any broker non-votes in connection with this proposal. Abstentions will be the equivalent
of a vote against this proposal.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT OUR STOCKHOLDERS VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF GRANT THORNTON LLP AS OUR INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2020. PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN ACCORDANCE WITH THE
BOARD'S RECOMMENDATION UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY.
Audit and Related Fees
Grant Thornton LLP served as our independent registered
public accounting firm for the years ended December 31, 2019 and 2018. Fees billed in connection with services rendered by Grant Thornton
LLP were as set forth below (on a consolidated basis including Acacia and its subsidiaries).
Period:
|
|
Audit Fees(1)
($)
|
|
Audit Related Fees(2)
($)
|
|
Tax Fees(3)
($)
|
|
All Other Fees
($)
|
Fiscal Year Ended December 31, 2020
|
|
329,657
|
|
10,000
|
|
93,420
|
|
105,373
|
Fiscal Year Ended December 31, 2019
|
|
532,000
|
|
32,000
|
|
183,000
|
|
—
|
__________________________________
|
(1)
|
Includes fees for professional services rendered for the audit of our annual consolidated financial statements included in our Form
10-K, the audit of the effectiveness of our internal control over financial reporting on the Form 10-K, consent fees, and for reviews
of our consolidated financial statements included in our quarterly reports on Form 10-Q.
|
|
(2)
|
Includes fees for professional services rendered for audit related work performed for certain stand-alone operating subsidiaries during
the period.
|
|
(3)
|
Includes fees for professional services rendered in connection with the preparation of consolidated and subsidiary federal and state
income tax returns, and tax related provision work, research, compliance and consulting.
|
Audit Committee Pre-Approval Policy
The Audit Committee has established policies and
procedures regarding pre-approval of all services provided by the independent registered public accounting firm. At the beginning of the
fiscal year, the Audit Committee pre-approves the engagement of the independent registered public accounting firm to provide audit services
based on fee estimates. The Audit Committee also pre-approves proposed audit-related services, tax services and other permissible services,
based on specified project and service details, fee estimates, and aggregate fee limits for each service category. The Audit Committee
receives information on the status of services provided or to be provided by the independent registered public accounting firm and the
related fees. All of the services performed by our independent registered public accounting firm in 2020 and 2019 were pre-approved by
the Audit Committee.
AUDIT COMMITTEE REPORT
The following is the report of the Audit Committee
with respect to our audited financial statements for 2020, which include our consolidated balance sheets as of December 31, 2020
and 2019, and the related consolidated statements of operations, stockholders’ equity and cash flows for each of the three years
in the period ended December 31, 2020, and the notes thereto.
Composition. The Audit Committee of the
Board is comprised of three independent directors and operates under a written charter adopted by the Board. The members of the Audit
Committee currently are Mr. Kohlberg and Mses. O’Connell and Wolanyk. The Board determined that each member of the Audit Committee
meets the independence requirements of the Nasdaq Stock Market and of Section 10A of the Exchange Act, that each member is able to read
and understand financial statements, and that Ms. O’Connell qualifies as an “audit committee financial expert,” as defined
by Item 407(d)(5)(ii) of Regulation S-K.
Responsibilities. The responsibilities of
the Audit Committee include recommending to the Board an accounting firm to be engaged as our independent registered public accounting
firm. Management has primary responsibility for preparing the financial statements and designing and assessing the effectiveness of internal
control over financial reporting. Grant Thornton LLP, our independent registered public accounting firm, is responsible for performing
an independent audit of our consolidated financial statements and internal control over financial reporting in accordance with the standards
of the Public Company Accounting Oversight Board (United States) and for issuing reports thereon. The Audit Committee’s responsibility
is to oversee these processes.
Review with Management and Grant Thornton. The
Audit Committee has reviewed our consolidated audited financial statements and held discussions with management and Grant Thornton LLP.
Management represented to the Audit Committee that our consolidated financial statements were prepared in accordance with generally accepted
accounting principles. The Audit Committee discussed with Grant Thornton LLP matters required to be discussed by the applicable requirements
of the Public Company Accounting Oversight Board and the SEC.
Grant Thornton LLP also provided to the Audit Committee
the written disclosures and the letter required by the Public Company Accounting Oversight Board for independent auditor communications
with audit committees concerning independence.
Conclusion. Based upon the Audit Committee’s
discussions with management and Grant Thornton LLP, the Audit Committee’s review of the representations of management and the report
of Grant Thornton LLP to the Audit Committee, the Audit Committee recommended that the Board include the audited consolidated financial
statements in our Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the SEC.
This report is submitted by the Audit Committee
of the Board.
|
Maureen O'Connell
|
|
Isaac T. Kohlberg
|
|
Katharine Wolanyk
|
PROPOSAL NO. 3:
NON-BINDING, ADVISORY VOTE ON THE COMPENSATION
OF OUR NAMED EXECUTIVE OFFICERS
Background
As required by Section 14A of the Exchange Act,
the Board is submitting a separate resolution for our stockholders to approve on a non-binding, advisory basis the compensation of our
named executive officers. This is an opportunity for our stockholders, through what is commonly referred to as a “say-on-pay”
vote, to endorse or not endorse our executive compensation program. At each of our annual meetings of stockholders from 2011 to 2020,
we provided our stockholders with the same opportunity to cast a non-binding, advisory vote on the compensation of our named executive
officers as disclosed in the Proxy Statement for each meeting. We have considered the results of those votes in structuring our compensation
programs and practices. We are providing our stockholders with the same opportunity to cast an advisory vote on the compensation of our
named executive officers at the Annual Meeting. After the Annual Meeting, we expect to hold our next non-binding, say on pay advisory
vote at our 2022 annual meeting of stockholders.
Summary
We are asking our stockholders to approve on a
non-binding, advisory basis the compensation of our named executive officers, as such compensation is described in the “Executive
Compensation and Related Information” section, the Summary Compensation Table and the other related tables and disclosure set forth
in this Proxy Statement. In addition to the information set forth below, we urge our stockholders to review the entire “Executive
Compensation and Related Information” section of this Proxy Statement for more information regarding the compensation of our named
executive officers.
Our executive compensation programs are designed
to attract, motivate and retain our named executive officers, who are critical to our success. Under these programs, our named executive
officers are rewarded for the achievement of long-term and strategic goals and the realization of increased stockholder value.
Our Compensation Committee continually reviews
the compensation programs for our named executive officers to ensure that the compensation programs achieve the desired goals of aligning
our executive compensation structure with our stockholders’ interests. We are asking our stockholders to indicate their support
for our named executive officer compensation as described in this Proxy Statement. This proposal gives our stockholders the opportunity
to express their views on the compensation of our named executive officers. This vote is not intended to address any specific item of
compensation, but rather the overall compensation of our named executive officers and our compensation philosophy, policies and practices
described in this Proxy Statement pursuant to the compensation disclosure rules of the SEC.
Required Vote
We believe that the information provided above
and in the “Executive Compensation and Related Information” section, the Summary Compensation Table and the other related
tables and disclosure set forth in this Proxy Statement demonstrates that our executive compensation program effectively ensures that
the interests of our named executive officers are aligned with the interests of our stockholders and with our short- and long-term goals.
You have the opportunity to vote “for”
or “against” or to “abstain” from voting on the following non-binding resolution relating to the compensation
of our named executive officers:
“RESOLVED, that
the stockholders of Acacia Research Corporation approve, on a non-binding, advisory basis, the compensation of the named executive officers
of Acacia Research Corporation as disclosed in Acacia Research Corporation’s Definitive Proxy Statement for the 2021 Annual Meeting
of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the “Executive
Compensation and Related Information” section, the Summary Compensation Table, and the other related tables and disclosure.”
The non-binding, advisory vote on the compensation
of our named executive officers is not binding on us, our Compensation Committee or our Board. However, we value the opinions of our stockholders
on executive compensation matters. We have considered and will continue to consider our stockholders’ concerns and have evaluated
and will continue to evaluate the appropriate actions to address those concerns.
The affirmative vote of the holders of a majority
of the outstanding shares of our capital stock present virtually or by proxy and entitled to vote at the Annual Meeting is required to
approve the compensation of our named executive officers. This proposal is considered a non-routine matter under applicable rules. A broker,
bank or other nominee may not vote without instructions on this matter, so there may be broker non-votes in connection with this proposal.
Broker non-votes will have no effect on this proposal. Abstentions will be the equivalent of a vote against this proposal.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT OUR STOCKHOLDERS VOTE “FOR” APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS, AS DISCLOSED IN THE “EXECUTIVE
COMPENSATION AND RELATED INFORMATION" SECTION, COMPENSATION TABLES AND NARRATIVE DISCUSSION SET FORTH IN THIS PROXY STATEMENT. PROXIES
SOLICITED BY THE BOARD WILL BE VOTED IN ACCORDANCE WITH THE BOARD'S RECOMMENDATION UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE
PROXY.
PROPOSAL NO. 4:
APPROVAL OF AN AMENDMENT TO OUR AMENDED AND
RESTATED CERTIFICATE OF INCORPORATION TO ELIMINATE SUPERMAJORITY VOTE REQUIREMENTS FOR SPECIFIED CORPORATE ACTIONS
Our Board of Directors has
unanimously approved and recommends that our stockholders approve an amendment to the Amended and Restated Certificate of Incorporation
to eliminate the supermajority stockholder approval requirements for specified corporate actions, including amendment of our Bylaws. The
specific amendments to our Amended and Restated Certificate of Incorporation that are necessary to make these changes are included in
the Certificate of Amendment of the Amended and Restated Certificate of Incorporation (the “Certificate of Amendment”) attached
to this Proxy Statement as Appendix A, and are incorporated herein by reference.
Delaware law grants stockholders
the right to amend, adopt, alter and repeal the bylaws of a corporation subject to the voting requirements set forth in a corporation’s
certificate of incorporation. Our current Certificate of Incorporation requires 66-2/3% of the voting power of the capital stock of the
Company for the stockholders to adopt, amend, alter or repeal any provisions of our Bylaws.
If this Proposal No. 4 is
approved, upon the filing with the Secretary of State of the State of Delaware, the Certificate of Amendment will require 66 and 2/3 percent
of the voting power of the capital stock of the Company entitled to vote thereon to adopt, amend, alter or repeal any provision of our
Bylaws.
This summary does not purport
to be complete and is qualified in its entirety by reference to the Certificate of Amendment attached hereto as Appendix A.
Advantages of Eliminating the Supermajority
Vote Requirement
The Board recognizes that
a majority voting standard for effecting changes to our Bylaws increases the ability of stockholders to participate in governance of the
Company and aligns the Company with recognized best practices in corporate governance.
Required Vote
The affirmative vote of 66
and 2/3 percent of the voting power of our capital stock entitled to vote on this proposal is required to approve this Proposal No. 4.
This proposal is considered a non-routine matter under applicable rules. A broker, bank or other nominee may not vote without instructions
on this matter, so there may be broker non-votes in connection with this proposal. Abstentions and broker non-votes will have the same
effect as votes against this proposal.
For the reasons stated above,
our Board of Directors believes that approval of this proposal is in our best interests and the best interests of our stockholders.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT OUR STOCKHOLDERS VOTE “FOR” THE AMENDMENT TO THE AMENDED AND RESTATE CERTIFICATE OF INCORPORATION
TO ELIMINATE SUPERMAJORITY STOCKHOLDER APPROVAL REQUIREMENTS FOR SPECIFIED CORPORATE ACTIONS AS SET FORTH ABOVE. PROXIES SOLICITED BY
THE BOARD WILL BE VOTED IN ACCORDANCE WITH THE BOARD'S RECOMMENDATION UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY.
OTHER MATTERS
We know of no other matters to be submitted to
the stockholders at the Annual Meeting. If any other matters properly come before the stockholders at the Annual Meeting, it is the intention
of the persons named on the enclosed proxy card to vote the shares they represent as the Board may recommend.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth certain information
known to us with respect to the beneficial ownership of our common stock as of March 15, 2021, by (i) all persons known to us to
beneficially own five percent (5%) or more of our common stock, (ii) each of our directors, (iii) each of our named executive
officers as identified in the “Summary Compensation Table” of the “Executive Compensation and Related Information”
section of this Proxy Statement, and (iv) all directors and executive officers as a group.
Beneficial Owner
|
|
Common Stock, Restricted Stock and Restricted Stock Units
|
|
Shares of Commons Stock Issuable Upon Exercise of Options
|
|
Amount of Direct Beneficial Ownership of Common Stock
|
|
Amount of Indirect Beneficial Ownership of Commons Stock
|
|
Percent of Class(1)
|
Named Executive Officers(2):
|
|
|
|
|
|
|
|
|
|
|
Clifford Press(3)
|
|
488,462
|
|
–
|
|
38,462
|
|
–
|
|
*
|
Alfred V. Tobia, Jr.(3)
|
|
588,462
|
|
–
|
|
138,462
|
|
–
|
|
*
|
Marc W. Booth
|
|
195,850
|
|
–
|
|
195,850
|
|
–
|
|
*
|
Richard Rosenstein(4)
|
|
86,500
|
|
–
|
|
–
|
|
–
|
|
*
|
Directors:
|
|
|
|
|
|
|
|
|
|
|
Maureen O’Connell
|
|
138,914
|
|
–
|
|
138,914
|
|
–
|
|
*
|
Katharine Wolanyk
|
|
113,914
|
|
–
|
|
113,914
|
|
–
|
|
*
|
Isaac T. Kohlberg
|
|
–
|
|
–
|
|
–
|
|
–
|
|
–
|
Jonathan Sagal
|
|
75,682
|
|
–
|
|
75,682
|
|
–
|
|
*
|
All Directors and Executive Officers as a Group (eight persons)
|
|
1,687,784
|
|
–
|
|
701,281
|
|
–
|
|
1.42%
|
* Less than one percent
_______________________________
(1)
|
The percentage of shares beneficially owned is based on 49,279,453 shares of our common stock outstanding as of March 15, 2021. Beneficial
ownership is determined under the rules and regulations of the SEC. Shares of common stock that may be acquired within 60 days after March
15, 2021, pursuant to the exercise of options warrants or other rights, are deemed to be outstanding and beneficially owned by the person
holding such securities for the purpose of computing the number of shares beneficially owned and the percentage ownership of such person,
but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person. Except as indicated in
the footnotes to this table, and subject to applicable community property laws, we believe that such persons have sole voting and investment
power with respect to all shares of our common stock shown as beneficially owned by them.
|
(2)
|
The address for each of our directors and executive officers is our principal executive office located at Acacia Research Corporation,
767 Third Avenue, Suite 602, New York, NY 10017.
|
(3)
|
Each of Messrs. Press and Tobia hold 450,000 restricted stock units which will vest on September 22, 2022 if certain performance objectives
based on absolute rates of return with respect to the Company's common stock are achieved by that date. These restricted stock units do
not vest within 60 days after March 15, 2021 and are therefore excluded from beneficial ownership.
|
(4)
|
Richard Rosenstein was appointed Chief Financial Officer on May 29, 2020. Mr. Rosenstein was engaged as a consultant to the company
from April 1, 2020 through May 28, 2020. Mr. Rosenstein holds 86,500 restricted stock units which will vest in equal installments over
a three-year period until June 4, 2023. These restricted stock units do not vest within 60 days after March 15, 2021 and are therefore
excluded from beneficial ownership.
|
Amount and Nature of
Beneficial
Ownership of Common Stock
Beneficial Owner
|
|
Sole Voting Power
|
|
Shared Voting Power
|
|
Sole Dispositive Power
|
|
Shared Dispositive Power
|
|
Aggregate Ownership
|
|
Total
|
|
Percent of Class(1)
|
5% Stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BlackRock, Inc.(2)
|
|
2,506,281
|
|
–
|
|
2,542,310
|
|
–
|
|
2,542,310
|
|
2,542,310
|
|
5.16%
|
Bank of Montreal(3)
|
|
2,607,935
|
|
10,195
|
|
2,790,583
|
|
150,111
|
|
2,949,747
|
|
2,949,747
|
|
5.99%
|
Renaissance Technologies LLC(4)
|
|
2,820,300
|
|
–
|
|
2,820,300
|
|
–
|
|
2,820,300
|
|
2,820,300
|
|
5.72%
|
Invesco Ltd.(5)
|
|
2,552,024
|
|
–
|
|
2,555,321
|
|
–
|
|
2,555,321
|
|
2,555,321
|
|
5.19%
|
____________________
(1)
|
The percentage of shares beneficially owned is based on 49,279,453 shares of our common stock outstanding as of March 15, 2021. Beneficial
ownership is determined under rules and regulations of the SEC.
|
(2)
|
The information reported is based solely on a Schedule 13G/A filed with the SEC by BlackRock, Inc. on January 29, 2021. According
to the Schedule 13G/A, the address for BlackRock Inc. is 55 East 52nd Street, New York, New York 10055.
|
(3)
|
The information reported is based solely on a Schedule 13G/A filed with the SEC by Bank of Montreal on February 13, 2015. According
to the Schedule 13G/A, the address for Bank of Montreal is 1 First Canadian Place, Toronto, Ontario, Canada MSX 1A1. The total for Bank
of Montreal includes 8,210 shares held in one or more employee benefit plans where BMO Harris Bank N.A., a subsidiary of Bank of Montreal,
as directed trustee, may be viewed as having voting or dispositive authority in certain situations pursuant to SEC and Department of Labor
regulations or interpretations. Pursuant to Rule 13d-4 under the Act, inclusion of such shares in this statement shall not be construed
as an admission that the Reporting Person or its subsidiaries are, for purposes of Section 13(d) or 13(g) of the Act, the beneficial owners
of such securities.
|
(4)
|
The information reported is based solely on a Schedule 13G/A filed with the SEC by Renaissance Technologies LLC on February 11, 2021.
According to the Schedule 13G, the address for Renaissance Technologies LLC is 800 Third Ave. New York, NY 10022.
|
(5)
|
The information reported is based solely on a Schedule 13G filed with the SEC by Invesco Ltd. on February 16, 2021. According to the
Schedule 13G, the address for Invesco Ltd. is 1555 Peachtree Street NE, Suite 1800, Atlanta, GA 30309.
|
Amount and Nature of Beneficial
Ownership of Series A Preferred Stock
Beneficial Owner
|
|
Sole Voting Power
|
|
Shared Voting Power
|
|
Sole Dispositive Power
|
|
Shared Dispositive Power
|
|
Aggregate Ownership
|
|
Total
|
|
Percent of Class(1)
|
5% Stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Starboard Value LP(2)
|
|
9,589,042(3)
|
|
–
|
|
350,000
|
|
–
|
|
350,000
|
|
350,000
|
|
100.00%
|
____________________
(1)
|
The percentage of shares beneficially owned is based on 350,000 shares of Series A Preferred Stock outstanding as of January 14, 2021.
Beneficial ownership is determined under rules and regulations of the SEC.
|
(2)
|
These securities are held by various managed accounts and funds to which Starboard Value serves as the investment manager, including,
without limitation, Starboard Value and Opportunity S LLC, Starboard Value and Opportunity C LP, Starboard Value and Opportunity Master
Fund L LP, Account Managed by Starboard Value LP, Starboard Value and Opportunity Master Fund Ltd, and Starboard X Master Fund Ltd. Starboard
Value also serves as the manager of Starboard Value and Opportunity S LLC. Starboard Value R LP acts as the general partner of Starboard
Value and Opportunity C LP. Starboard Value L LP acts as the general partner of Starboard Value and Opportunity Master Fund L LP. Starboard
Value GP LLC ("Starboard Value GP") acts as the general partner of Starboard Value. Starboard Principal Co LP ("Principal
Co") acts as a member of Starboard Value GP. Starboard Principal Co GP LLC ("Principal GP") acts as the general partner
of Principal Co. Each of Jeffrey C. Smith and Peter A. Feld acts as a member of Principal GP and as a member of each of the Management
Committee of Starboard Value GP and the Management Committee of Principal GP. Each of the foregoing disclaims beneficial ownership of
these securities except to the extent of its or his pecuniary interest therein.
|
(3)
|
Represents the voting power of the Series A Preferred Stock calculated on an as-converted basis, based on a conversion price of $3.65.
|
EXECUTIVE COMPENSATION AND RELATED INFORMATION
Executive Summary
This narrative discussion of the compensation policies
and arrangement that apply to our named executive officers is intended to assist your understanding of, and to be read in conjunction
with, the Summary Compensation Table and related disclosures set forth below. We are a smaller reporting company, and therefore, we are
eligible to comply with the executive compensation disclosure rules applicable to a smaller reporting company as defined in applicable
SEC rules and regulations.
For the 2020 fiscal year, our named executive officers
were as follows:
|
•
|
Clifford Press, our Chief Executive Officer
|
|
•
|
Alfred V. Tobia, Jr., our President and Chief Investment Officer
|
|
•
|
Richard Rosenstein, our Chief Financial Officer (appointed May 29, 2020)
|
|
•
|
Marc W. Booth, our Chief Intellectual Property Officer
|
|
•
|
Meredith Simmons, our former General Counsel (appointed May 29, 2020 and terminated October 14, 2020)
|
Overview and Objectives of Our Executive Compensation Programs
[Our compensation policies for executive officers
seek to align our executive officers' interests and motivations with those of our stockholders by rewarding both short and long-term objectives.
Overall compensation of our executive officers should provide a competitive level of total compensation that enables us to attract, retain
and incentivize highly qualified executive officers with the background and experience necessary to lead the company and achieve its business
goals.]
[We view 2020 as a foundational year as we transition
away from our legacy businesses. When considering compensation for our executives in 2020 we determined that our executives were able
to achieve a number of key strategic objectives, including obtaining financing through our strategic partnership with Starboard, completing
a milestone transaction acquiring shares in 18 public and private life sciences companies, and reinvigorating our patent assertion business.
As the Company continues to grow and evolve the Compensation Committee and Board intends to review and modify our compensation policies
to ensure that we attract, motivate and retain highly skilled employees to execute on our strategic objectives.]
Base Salary
The base salaries of our named executive officers
in fiscal year 2020 were:
Name of Executive
|
Position
|
Base Salary ($)
|
Clifford Press
|
Chief Executive Officer
|
475,000
|
Alfred V. Tobia, Jr.
|
President and Chief Investment Officer
|
475,000
|
Richard Rosenstein(1)
|
Chief Financial Officer
|
425,000
|
Marc W. Booth(2)
|
Chief Intellectual Property Officer
|
425,000
|
Meredith Simmons(3)
|
Former General Counsel
|
400,000
|
__________________________________
(1)
|
Mr. Rosenstein was appointed Chief Financial Officer, effective May 29, 2020.
|
(2)
|
Mr. Booth’s salary was increased to $425,000, effective June 19, 2020.
|
(3)
|
Ms. Simmons was appointed General Counsel, effective May 29, 2020 and was terminated on October 14, 2020.
|
Annual Incentive Compensation
[The Compensation Committee noted that 2020 was a foundational year for
the Company - the Company successfully negotiated financing terms with its strategic partner and was able to complete a successful acquisition
of life sciences equity securities in a portfolio of public and private companies, all while navigating the challenges of the COVID-19
pandemic. In determining whether our executives were eligible for a bonus in fiscal year 2020, our
Compensation Committee considered each officer’s performance in in achieving the company’s strategic objectives during 2020,
the stock price performance of the Company and the total compensation of each executive officer. Accordingly, the Compensation
Committee awarded the following cash awards to our named executive officers in fiscal year 2020:]
Named Executive Officer
|
|
Discretionary Bonus ($)
|
Clifford Press(1)
|
|
712,500
|
Alfred V. Tobia, Jr.(1)
|
|
712,500
|
Marc W. Booth(3)(4)
|
|
328,750
|
Richard Rosenstein(2)(4)
|
|
435,000
|
Meredith Simmons(5)
|
|
–
|
_____________________
(1)
|
Messrs. Press and Tobia were each paid a bonus equal to 150% of their annual salary. Each of Messrs. Press and Tobia met the targets
established in their Employments Agreements (as defined below) to earn a bonus in the amount equal to 150% of their annual salary.
|
(2)
|
Mr. Rosenstein was paid a bonus equal to 100% of his annual salary. Mr. Rosenstein met the targets set by the Board to earn a bonus
in the amount of 100% of his annual salary.
|
(3)
|
Mr. Booth was paid a bonus equal to 75% of his annual salary. Mr. Booth met the targets set by the Board to earn a bonus in the amount
of 75% of his annual salary.
|
(4)
|
Messrs. Booth and Rosenstein earned an additional bonus of $10,000 for their work on the portfolio of securities the company acquired
from LF Equity Income Fund on June 4, 2020.
|
(5)
|
Ms. Simmons was terminated on October 14, 2020 and did not receive a discretionary bonus for 2020.
|
Equity Compensation
To align compensation with long term performance,
our equity compensation plan allows for the grant of stock options, restricted stock units and restricted stock awards to our named executive
officers and other employees. Each named executive officer is eligible to be considered for an annual equity award.
The chart below shows the number of equity grants
to our named executive officers during the 2020 fiscal year.
Name
|
|
Restricted
Stock Units
|
|
Restricted
Stock Awards
|
|
Number of Fair
Market Priced Options
|
Clifford Press
|
|
–
|
|
–
|
|
–
|
Alfred V. Tobia, Jr.
|
|
–
|
|
–
|
|
–
|
Richard Rosenstein(1)
|
|
86,500
|
|
–
|
|
–
|
Marc W. Booth(2)
|
|
–
|
|
100,000
|
|
–
|
Meredith Simmons(3)
|
|
80,000
|
|
–
|
|
–
|
____________________________________
(1)
|
One-third of the restricted stock units vest every year for three years beginning from the grant date.
|
(2)
|
One-sixth of the restricted stock awards vest every six months for three years beginning from the grant date.
|
(3)
|
Ms. Simmons was terminated on October 14, 2020 before any of the restricted stock units had vested and her restricted stock units
were cancelled upon termination.
|
Employee Benefits and Perquisites
The named executive officers participate in our
employee benefits programs that are provided to all of our employees, including medical, dental, vision, life, and disability insurance,
to the same extent made available to other employees, subject to applicable law. There are no additional benefits or perquisites applicable
exclusively to any of the named executive officers, except that our Chief Executive Officer, President and Chief Investment Officer, Chief
Financial Officer and former General Counsel received additional medical insurance benefits.
Employment Agreements
Messrs. Press and Tobia
Each of Messrs. Press and Tobia has entered into
an Employment Agreement (the “Employment Agreements”) with the Company and Acacia Research Group LLC, the Company’s
primary operating subsidiary (“ARG”), pursuant to which they have agreed to devote substantially all of their working time
and efforts to Acacia's business. Pursuant to the terms of the Employment Agreements, each of Messrs. Press and Tobia (i) are entitled
to receive an annual salary of $475,000 (subject to increase), (ii) are eligible to receive an annual bonus to be determined by the Compensation
Committee in accordance with annual performance objectives established by the Compensation Committee on an annual basis, (iii) received
an initial grant of restricted stock units (the “Initial Equity Grant”), having a grant date fair value of $650,000, that
will vest based on the achievement of certain performance objectives based on absolute rates of return with respect to the Company’s
common stock at the end of a three-year period, and (iv) received a one-time payment of $350,000 as an inducement to their accepting their
positions with the Company. Additionally, each of Messrs. Press and Tobia have the right to purchase up to 7.5 percent of the Company’s
common stock and the Company will take such actions as may be necessary to permit such purchases under the Company’s Tax Benefits
Preservation Plan. Further, each of Messrs. Press and Tobia have forfeited 43,478 restricted stock awards that they received in 2019 in
connection with their service as members of the Company’s Board of Directors. Under their Employment Agreements, each of Messrs.
Press and Tobia also agree to be subject to and comply with the Company’s policies related to their outside business activities.
The Employment Agreements provide for certain payments
to each of Messrs. Press and Tobia upon termination by the Company without Cause or upon resignation by them for Good Reason (as such
terms are defined in the Employment Agreements). Upon termination by the Company for Cause or upon the resignation by Mr. Press or Mr.
Tobia without Good Reason, each of Messrs. Press and Tobia, as applicable, is entitled to receive payment for (i) any earned but unpaid
salary, (ii) any earned but unused vacation time, (iii) reimbursement for business expenses incurred but not yet paid, and (iv) any other
payments or benefits to which he may be entitled (collectively, the “Accrued Obligations”).
Upon termination by the Company without Cause or
resignation for Good Reason, each of Messrs. Press and Tobia are entitled to receive, in addition to the Accrued Obligations, (i) a severance
payment equal to 1.5 times their annual salary (or two times the sum of their annual salary and target bonus if such termination occurs
within one year of a change in control of the Company), (ii) a pro-rated portion of the target bonus payable with respect to the year
in which the date of termination occurs (the “Pro Rata Bonus”), and (iii) payment by the Company of the Company’s portion
of the premiums for any health plan benefits for his and his eligible dependents for a period of 18 months (the
28
“Health Benefits”). In addition, if
such termination occurs within one year following a change in control of the Company, all restricted stock units under the Initial Equity
Grant will be deemed to have fully vested.
Upon termination by the Company by reason of death
or disability of Mr. Press or Mr. Tobia, each of Messrs. Press and Tobia, as applicable, are entitled to receive, in addition to the Accrued
Obligations, the Pro Rata Bonus and the Health Benefits.
Mr. Rosenstein
Mr. Rosenstein has entered into an Employment Agreement
(the “CFO Employment Agreement”) with the Company and ARG. Pursuant to the terms of the CFO Employment Agreement, Mr. Rosenstein
(i) is entitled to receive an annual salary of $425,000, (ii) is eligible to receive an annual bonus in an amount ranging from 25-100%
of his annual salary with a target of 50%, to be determined by the Board in accordance with annual performance objectives established
by the Board on an annual basis, (iii) received an initial grant of restricted stock units, having a grant date fair value of $275,935,
where one-third of the grant will vest annually over a three-year period.
The CFO Employment Agreement provides for certain
payments to Mr. Rosenstein upon termination by the Company without Cause or upon resignation by them for Good Reason (as such terms are
defined in the Employment Agreements) subject to Mr. Rosenstein’s (i) execution and non-revocation of a general release of claims
in a form acceptable to the Company within 55 days following the date of termination and (ii) compliance with the provisions of the CFO
Employment Agreement. In such an event, Mr. Rosenstein will be entitled to continued payment of his annual salary for a period of 12 months
following the date of termination.
Mr. Booth
Mr. Booth entered into an Employment Agreement
(the “Amended Employment Agreement”) with the Company and ARG. Pursuant to the terms of the Amended Employment Agreement,
Mr. Booth (i) is entitled to receive an annual salary of $425,000, (ii) is eligible to receive an annual bonus in an amount ranging from
25-75% of his annual salary, to be determined by the Board in accordance with annual performance objectives established by the Board on
an annual basis. The Amended Employment Agreement does not include any severance payments or change of control bonuses.
Other than as set forth above, we do not have any
employment agreements or other compensatory plans, contracts, or arrangements of any kind with our named executive officers (collectively,
“Other Employment Agreements”) which contain excise tax gross up provisions, guaranteed payment provisions, single trigger
change of control provisions, guaranteed escalator provisions, or multi-year terms with auto renewal features. All Other Employment Agreements
with our named executive officers may be terminated by either party for any reason upon thirty days’ advance notice. Upon termination
without cause, the named executive officer will be eligible for payment pursuant to the terms of the Other Employment Agreement. In addition,
the named executive officer is eligible for an annual incentive award equal to a percentage of his or her base salary, payable at the
discretion of the Compensation Committee and in accordance with the compensation parameters described herein. The award is based upon
personal performance, overall company performance and other factors as detailed above that the Compensation Committee considers. Our Other
Employment Agreements do not provide for the payment of any excise tax gross-up amounts.
Other than as otherwise set forth above, we do
not have any agreement or arrangement with any named executive officer relating to a change in control of our company other than any provisions
for the accelerated vesting of stock awards in their respective stock award agreements as set forth in our employment agreements with
the named executive officer.
Other Compensation Policies
Insider Trading Policy
Our Insider Trading Policy prohibits directors,
officers and employees, including named executive officers, and contractors (collectively, “Covered Persons”) from engaging
in hedging transactions, such as put or call options, short sales, prepaid variable forward contracts, equity swaps, collars and exchange
funds put or call options, collars and exchange funds. In addition, our Insider Trading Policy prohibits Covered Persons from holding
Acacia securities in a margin account or otherwise pledge Acacia securities as collateral for a loan without prior approval by the Company.
[Clawback Policy
If we are required, as a result of misconduct,
to restate our financial results due to our material noncompliance with any financial reporting requirements under the federal securities
laws, our executive officers, including named executive officers, may be legally required to reimburse us for any bonus or other incentive-based
or equity-based compensation they received as a result of the material noncompliance.]
[Stock Ownership Guidelines
In 2021, our board of directors adopted Stock Ownership
Guidelines requiring that all directors and executive officers, including our named executive officers, own a significant ownership interest
in our common stock, subject to a phase-in period, in order to align their interests with those of our stockholders. The policy requires
that our directors and executive officers own equity as follows:
|
•
|
[ ]X
for the Chief Executive Officer and the President;
|
|
•
|
[ ]X
for all other employees with a “Chief” or “Executive Vice President” title and members of the board of directors;
and
|
|
•
|
[ ]X
for any other “executive officers” not addressed above.]
|
Summary Compensation
The following table sets forth information concerning
all cash and non-cash compensation earned for services rendered in all capacities to us during the last fiscal year for our named executive
officers.
SUMMARY COMPENSATION TABLE
Name and Principal Position(s)
|
|
Year
|
|
Salary ($)
|
|
Bonus ($)(2)
|
|
Stock Awards ($)(1)
|
|
Stock Units ($)(1)
|
|
Non-Equity Incentive Plan Compensation
($)(3)
|
|
Non-qualified Deferred Compensation
Earnings ($)
|
|
All Other Compensation ($)(7)
|
|
Total ($)
|
Clifford
Press(4)
Chief Executive Officer
|
|
2020
|
|
475,000
|
|
–
|
|
–
|
|
–
|
|
712,500
|
|
–
|
|
12,924
|
|
1,200,424
|
|
|
2019
|
|
127,885
|
|
285,436
|
|
120,771
|
|
639,810
|
|
157,115
|
|
–
|
|
–
|
|
1,331,017
|
Alfred
V. Tobia, Jr.(4)
President & Chief Intellectual Property Officer
|
|
2020
|
|
475,000
|
|
–
|
|
–
|
|
–
|
|
712,500
|
|
–
|
|
12,924
|
|
1,200,424
|
|
|
2019
|
|
127,885
|
|
285,436
|
|
120,771
|
|
639,810
|
|
157,115
|
|
–
|
|
–
|
|
1,331,017
|
Richard
Rosenstein
Chief Financial Officer(5)
|
|
2020
|
|
238,654
|
|
10,000
|
|
–
|
|
275,935
|
|
425,000
|
|
–
|
|
74,000
|
|
1,023,589
|
|
|
2019
|
|
–
|
|
–
|
|
–
|
|
–
|
|
–
|
|
–
|
|
–
|
|
–
|
Marc
W. Booth
Chief Intellectual Property Officer
|
|
2020
|
|
387,788
|
|
10,000
|
|
387,000
|
|
–
|
|
318,750
|
|
–
|
|
–
|
|
1,103,539
|
|
|
2019
|
|
347,692
|
|
–
|
|
233,250
|
|
–
|
|
140,000
|
|
–
|
|
–
|
|
720,942
|
Meredith
Simmons
Former General Counsel(5)(6)
|
|
2020
|
|
152,308
|
|
–
|
|
–
|
|
–
|
|
–
|
|
–
|
|
180,922
|
|
333,230
|
|
|
2019
|
|
–
|
|
–
|
|
–
|
|
–
|
|
–
|
|
–
|
|
–
|
|
–
|
____________________
(1)
|
Stock awards consist of restricted stock awards. Stock Units consist of restricted stock units. Amounts shown do not reflect compensation
actually received by the named executive officer. Instead, the amounts shown represent the aggregate grant date fair value related to
equity-based awards granted to the named executive officers during the years indicated, as determined, for financial statement purposes,
pursuant to ASC Topic 718. The method used to calculate the aggregate grant date fair value of equity-based awards is set forth under
Notes 2 and 9 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31,
2020.
|
(2)
|
The amounts shown for each of Messrs. Press and Tobia represent inducement payments received pursuant to their Employment Agreements.
The amounts shown for Messrs. Rosenstein and Booth represent a discretionary bonus received in connection with Messrs. Rosenstein and
Booth’s contributions toward the Company’s achievement of certain strategic objectives during the fiscal year ended December
31. 2020.
|
(3)
|
Represents incentive payments made pursuant to our cash incentive compensation program and other discretionary bonuses.
|
(4)
|
Amounts in this table represent compensation received by Messrs. Press and Tobia solely in their capacities as named executive officers
during the years indicated. In 2019, Messrs. Press and Tobia received $617,378 and $616,267 respectively in compensation for services
rendered above and beyond their duties as directors of the Company due to exigent circumstances in connection with the departure of the
Company's previous management team in 2018. These payments were made prior to the appointments of Messrs. Press and Tobia as Chief Executive
Officer and President and Chief Investment Officer, respectively, on September 3, 2019.
|
(5)
|
Mr. Rosenstein was engaged as a consultant to the Company from April 1, 2020 – May 28, 2020. Ms. Simmons was engaged as a consultant
to the Company from January 22, 2020 to May 28, 2020. Compensation Mr. Rosenstein and Ms. Simmons received as part of each of their consulting
agreements with the Company is listed in All Other Compensation.
|
(6)
|
Ms. Simmons was employed by the Company as General Counsel from May 29, 2020 through October 14, 2020. Payments she received upon
termination are listed in All Other Compensation.
|
(7)
|
The amounts shown for Messrs. Press and Tobia represent payments for additional medical insurance benefits.
|
Executive Officers
The table below provides information concerning
our executive officers as of the date of this Proxy Statement.
Name
|
Age
|
Positions with the Company
|
Clifford Press
|
67
|
Chief Executive Officer
|
Alfred V. Tobia, Jr.
|
56
|
President & Chief Investment Officer
|
Richard Rosenstein
|
56
|
Chief Financial Officer
|
Jason Soncini
|
44
|
General Counsel
|
Marc W. Booth
|
63
|
Chief Intellectual Property Officer
|
____________________
Biographies for Messrs. Press and Tobia can be
found under the section entitled "Proposal No. 1 Election of Directors" above.
Richard Rosenstein joined Acacia
as its Chief Financial Officer on May 29, 2020. Prior to this appointment, he served in several CFO roles, most recently as CFO
of CLEAR since 2017. Prior to joining CLEAR, he served as CFO at Independent Sports and Entertainment, a leading sports management and
consulting agency, from January 2017 to August 2017, and as CFO/CAO at SFX Entertainment (now LiveStyle, inc.), the largest global producer
of live events and digital entertainment content focused on electronic music, from October 2012 to December 2016. This follows over
15 years of experience as a research analyst covering the communications, media, and entertainment industries at firms including Goldman
Sachs from 1995 to 2004, and Baron Capital from 2007 to 2012. Mr. Rosenstein has a BA in mathematics from the University of Pennsylvania
and an MBA in finance from Columbia Business School.
Jason Soncini joined Acacia as its
General Counsel on March 16, 2021. From April 2017 until he joined Acacia, Mr. Soncini was employed at Shanda Group, a privately-owned
multinational investment firm, initially as Deputy General Counsel and then as General Counsel. From October 2013 until April 2017, Mr.
Soncini was an attorney at Kleinberg, Kaplan, Wolff & Cohen, P.C. Mr. Soncini began his legal career at Olshan Frome Wolosky LLP in
2006. Mr. Soncini received his J.D. from Northwestern University and holds a B.A. in Mathematics from the University of Michigan.
Marc W. Booth joined Acacia as its
Chief Intellectual Property Officer on August 8, 2018. Mr. Booth has over 10 years of experience in patent analysis/licensing in areas
such as semiconductor, telecommunications, consumer electronics and medical devices. Mr. Booth served as the Executive Vice President,
General Manager of ARG from 2013 to 2017. He joined Acacia in 2006 as Vice President. Prior to joining Acacia, Mr. Booth’s career
in design and development included positions as Senior Director Engineering of Powerwave Technologies; Vice President Engineering and
CTO of Comarco Wireless Technologies and Vice President Engineering, Sony Corporation. He began his engineering career as a Masters Fellow
at Hughes Aircraft Co. Display Systems Division. Mr. Booth holds a BS Physics from the University of California Riverside and an MSEE
degree from the University of Southern California.
2020 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The following table provides information, with
respect to the named executive officers, concerning the outstanding equity awards of our common stock at the end of fiscal year 2020.
Name
|
|
Option Awards
|
|
|
|
Stock Awards
|
Name
|
|
Number of Securities
Underlying Unexercised Options (#) Exercisable
|
|
Number of Securities
Underlying Unexercised Options (#) Unexercisable
|
|
Equity Incentive Plan
Awards: Number of Securities Underlying Unexercised Unearned Options (#)
|
|
Option Exercise Price ($)
|
|
Number of Shares or Units
of StockThat Have Not Vested (#)
|
|
Market Value of Shares
or Units of Stock That Have Not Vested ($)(2)
|
|
Equity Incentive Plan
Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)
|
|
Equity Incentive Plan
Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
|
|
Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant
|
|
Fully Vested (1)
|
Clifford Press
|
|
–
|
|
–
|
|
–
|
|
–
|
|
450,000
|
|
1,773,000
|
–
|
–
|
|
–
|
|
9/3/2019
|
|
9/22/2022
|
Alfred V. Tobia, Jr.
|
|
–
|
|
–
|
|
–
|
|
–
|
|
450,000
|
|
1,773,000
|
|
–
|
|
–
|
|
9/3/2019
|
|
9/22/2022
|
Richard Rosenstein
|
|
–
|
|
–
|
|
–
|
|
–
|
|
86,500
|
|
340,810
|
|
–
|
|
–
|
|
6/4/2020
|
|
6/4/2023
|
Marc W. Booth
|
|
–
|
|
–
|
|
–
|
|
–
|
|
37,500
|
|
147,750
|
|
–
|
|
–
|
|
6/13/2019
|
|
5/8/2022
|
|
|
–
|
|
–
|
|
–
|
|
–
|
|
83,334
|
|
328,336
|
|
–
|
|
–
|
|
6/18/2020
|
|
6/18/2023
|
____________________
(1)
|
Fully vested date assuming continued employment through the final vest date. The restricted stock units for Messrs. Press and Tobia
will vest only if certain performance objectives based on absolute rates of return with respect to the Company's common stock are achieved
by September 22, 2022.
|
(2)
|
The fair market value of a share of our common stock is assumed to be $3.94, which was the closing price of our common stock on the
Nasdaq Global Select Market on December 31, 2020, the last trading day of 2020.
|
(3)
|
Option Expiration Date assuming continued employment through the final vest date.
|
EQUITY PLAN COMPENSATION PLAN INFORMATION
Equity Compensation Plan Information
The following table provides information with respect
to shares of our common stock issuable under our equity compensation plans as of December 31, 2020:
Plan Category
|
|
(a)
Number of
securities
to be issued
upon exercise
of outstanding
options (#)
|
|
(b)
Weighted-
average
exercise
price of
outstanding
options ($)
|
|
(c)
Number of
securities
remaining
available for
future issuance
under equity
compensation
plans (#)
(excluding securities
reflected in
column (a))
|
Equity compensation plans approved by security holders:
|
|
|
|
|
|
|
2013 Acacia Research Stock Incentive Plan(1)
|
|
161,334
|
|
3.29
|
|
378,270
|
2016 Acacia Research Stock Incentive Plan(2)
|
|
148,749
|
|
5.62
|
|
4,068,308
|
Subtotal
|
|
310,083
|
|
4.41
|
|
4,446,578
|
____________________
(1)
|
The initial share reserve under the 2013 Plan, was 4,750,000 shares of our common stock. Column (a) excludes non-vested restricted
stock awards and restricted stock units outstanding at December 31, 2020. In June 2016, 625,390 shares of common stock available for issuance
under the 2013 Stock Plan were transferred into the 2016 Stock Plan.
|
(2)
|
The initial share reserve under the 2016 Plan was 4,500,000 shares plus 625,390 shares of common stock available for issuance under
the 2013 Plan. No new additional shares will be added to the 2016 Plan without stockholder approval (except for shares subject to outstanding
awards that are forfeited or otherwise returned to the 2016 Plan).
|
Certain Relationships and Related Transactions
We do not have a formal policy for review, approval
or ratification of related party transactions required to be reported in this Proxy Statement. However, we have adopted a corporate Code
of Conduct for Employees and Directors which applies to all of our employees, officers, and directors and a Code of Conduct for Chief
Executive Officer and Other Senior Financial Officers additional code that specifically applies to our principal executive officer, principal
financial officer and accounting officer and controller or persons performing similar functions. Each Code of Conduct provides obligations
and prohibitions on any related party transactions which cause our employees, officers or directors to face a choice between what is in
their personal interest and what is in our interest. The corporate Code of Conduct requires conflicts of interest which result from investments
in companies doing business with us or in one of our competitors to be disclosed to our General Counsel or a member of the Audit Committee
and approved by the Board. The corporate Code of Conduct requires employees, officers, and directors that are conducting our business
with family members to disclose such transactions to our General Counsel or a member of the Audit Committee. Such transactions are generally
prohibited unless approved by the Board.
We review the questionnaires completed by
our directors and executive officers annually. If any related party transactions are reported, management reviews the transactions
and consults with the Board. Since January 1, 2020, there has not been any transaction or series of similar transactions, or any
currently proposed transactions, to which we were or are a party in which the amount involved exceeded or exceeds the lesser of
$120,000 or one percent of the average of the Company’s total assets at year-end for the last two completed fiscal years,
and in which any director, nominee for director, executive officer, holder of more than 5% of any class of our voting securities,
or any member of the immediate family of any of the foregoing persons, had or will have a direct or indirect material interest,
except that during the fiscal year ended December 31, 2020, the Company paid $136,000 to Ms. Simmons for certain consulting services
from January 22, 2020 until the Company hired her as a full-time General Counsel on May 29, 2020.
Indemnification Agreements with Directors and
Officers. In addition to the indemnification provisions contained in our Certificate of Incorporation and Bylaws, each as amended
to date, we have entered into separate indemnification agreements with each of our directors and officers. These agreements require us,
among other things, to indemnify each such director or officer against expenses (including attorneys’ fees), damages, judgments,
fines, penalties and settlements paid by such individual in connection with any action, suit or proceeding arising out of such individual’s
status or service as our director or officer (other than liabilities with respect to which such individual receives payment from another
source, arising in connection with certain final legal judgments, arising from willful misconduct or conduct that is knowingly fraudulent
or deliberately dishonest, or which we are prohibited by applicable law from paying) and to advance expenses incurred by such individual
in connection with any proceeding against such individual with respect to which such individual may be entitled to indemnification by
us.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires our
directors, executive officers and holders of more than 10% of our common stock to file with the SEC initial reports of ownership and reports
of changes in ownership of our common stock. We believe that, based on the written representations of our directors and officers, and
the copies of reports filed with the SEC during the fiscal year ended December 31, 2020, our directors, officers and holders of more
than 10% of our common stock complied with the requirements of Section 16(a) except that a Form 4 report was filed late on September 9,
2020 on behalf of Maureen O’Connell to disclose a reportable transaction.
Form 10-K
On March 29, 2021, we filed with the SEC an
Annual Report on Form 10-K for the fiscal year ending December 31, 2020. A copy of our Annual Report on Form 10-K has been mailed
concurrently with this Proxy Statement to all stockholders entitled to notice of and to vote at the Annual Meeting. The Annual Report
on Form 10-K is not incorporated into this Proxy Statement and is not considered proxy solicitation material.
Householding
We have adopted a procedure, approved by the SEC,
called “householding.” Under this procedure, stockholders of record who have the same address and last name and do not participate
in electronic delivery of proxy materials will receive only one copy of this Notice of Annual Meeting and Proxy Statement and our Annual
Report on Form 10-K, unless we are notified that one or more of these stockholders wishes to continue receiving individual copies. This
procedure will reduce our printing costs and postage fees. Stockholders who participate in householding will continue to receive separate
proxy cards.
If you are eligible for householding, but you and
other stockholders of record with whom you share an address currently receive multiple copies of this Notice of Annual Meeting and Proxy
Statement and any accompanying documents, or if you hold our stock in more than one account, and in either case you wish to receive only
a single copy of each of these documents for your household, please contact our Corporate Secretary at (949) 480-8300 or write to her
at Acacia Research Corporation, 4 Park Plaza, Suite 550, Irvine, California 92614.
If you participate in householding and wish to
receive a separate copy of this Notice of Annual Meeting and Proxy Statement and any accompanying documents, or if you do not wish to
continue to participate in householding and prefer to receive separate copies of these documents in the future, please contact our Corporate
Secretary as indicated above. Upon your written or oral request, we will promptly deliver you a separate copy of this Notice of Annual
Meeting and Proxy Statement and accompanying documents.
If you are a beneficial owner, you can request
information about householding from your broker, bank or other holder of record.
Stockholder Proposals for the 2021 Annual Meeting
Under Rule 14a-8 of the Exchange Act, any stockholder
desiring to include a proposal in our Proxy Statement with respect to the 2022 Annual Meeting should arrange for such proposal to be delivered
to our Corporate Secretary at 4 Park Plaza, Suite 550, Irvine, California 92614 no later than December 3, 2021, in order to be considered
for inclusion in our Proxy Statement relating to such annual meeting. Matters pertaining to such proposals, including the number and length
thereof, and the eligibility of persons entitled to have such proposals included, are regulated by Rule 14a-8 of the Exchange Act, the
rules and regulations of the SEC and other laws and regulations to which interested persons should refer.
In order for a stockholder proposal not intended
to be subject to Rule 14a-8 (and thus not subject to inclusion in our Proxy Statement) to be considered “timely” within the
meaning of Rule 14a-4 under the Exchange Act, and pursuant to our Bylaws, notice of any such stockholder proposals must be delivered to
our Corporate Secretary in writing at 4 Park Plaza, Suite 550, Irvine, California 92614 not less than the close of business on the 90th
day nor earlier than the close of business on the 120th day prior to the first anniversary of the 2021 Annual Meeting, after which a proposal
is untimely. In the event that the date of the 2022 Annual Meeting is more than 30 days before or more than 70 days after such anniversary
date, notice by the stockholder must be so delivered not earlier than the close of business on the 120th day prior to the 2022 Annual
Meeting and not later than the close of business on the later of the 90th day prior to the 2022 Annual Meeting or the 10th day following
the day on which public announcement of the date of the 2022 Annual Meeting is first made by us. A stockholder’s notice to the Secretary
must set forth for each matter proposed to be brought before the annual meeting (a) a brief description of the matter the stockholder
proposes to bring before the meeting and the reasons for conducting such business at the meeting, (b) the name and address of the
stockholder proposing such business, (c) the number of shares of our common stock which are beneficially owned by the stockholder, and
(d) any material interest of the stockholder in such business.
[ ], 2021
|
By Order of the Board of Directors,
|
|
|
|
Jennifer Graff
|
|
Secretary
|
Appendix A
CERTIFICATE OF AMENDMENT OF
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
ACACIA RESEARCH CORPORATION
Pursuant to Section 242 of the
General Corporation Law of the State of Delaware
Acacia Research Corporation
(the “Corporation”), a corporation duly organized and validly existing under and by virtue of the General Corporation
Law of the State of Delaware (the “DGCL”), hereby certifies that:
FIRST: The Amended
and Restated Certificate of Incorporation of the Corporation (the “Restated Certificate”) is hereby amended
as follows:
Article V, Section 2 of
the Restated Certificate is hereby deleted in its entirety and the following is hereby inserted in lieu thereof:
“SECTION 2. POWERS
OF THE BOARD OF DIRECTORS. In furtherance, and not in limitation, of the powers conferred by the laws of the State of Delaware, the
Board of Directors is expressly authorized to adopt, alter, amend and repeal the By-laws of the Corporation, subject to the power of the
stockholders of the Corporation to alter or repeal any by-law whether adopted by them or otherwise; provided, however, that the affirmative
vote of a majority of the voting power of the capital stock of the Corporation entitled to vote thereon shall be required for stockholders
to adopt, amend, alter or repeal any provision of the By-laws of the Corporation.”
SECOND: The foregoing
amendment was duly adopted in accordance with the provisions of Section 242 of the DGCL.
[Signature page follows]
IN WITNESS WHEREOF, the Corporation has
caused this Certificate of Amendment to be signed by the undersigned duly authorized officer of the Corporation, on [______________].
|
ACACIA RESEARCH CORPORATION
|
|
|
|
By:________________________
|
|
[____________]
|
|
[OFFICE]
|
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