|[February 17, 2017]
Cypress Semiconductor's Largest Individual Stockholder, T.J. Rodgers, Nominates Two Highly Qualified Candidates for Board of Directors
T.J. Rodgers, founder and former CEO, President and Director of Cypress
Semiconductor Corp. (NASDAQ: CY) ("Cypress" or "the Company") and the
Company's largest individual stockholder, announced today that he has
nominated two highly qualified candidates to serve on Cypress's Board of
Directors in the election of directors at the 2017 Annual Meeting of
Stockholders. Rodgers owns or controls voting of 8,625,619 shares of
Cypress common stock, more than four times as much as all Cypress
directors and executive officers combined.
"Cypress Semiconductor faces serious conflicts of interest and ethical
deficiencies," said Rodgers. "Rather than address these, the Cypress
Board has chosen to announce what they purport to be changes to
strengthen corporate governance but which are in fact simply an attempt
to prevent even extraordinarily qualified new directors from joining the
Board. I deliberately chose to nominate for the Board two highly
qualified industry veterans, because this isn't about T.J. Rodgers but
about focusing the attention of all Cypress stockholders on these
serious issues. The nominees I've proposed, Dan McCranie and Camillo
Martino, both of whom are semiconductor experts, will better serve the
Board than conflicted Executive Chairman Ray Bingham and Lead Director
Eric Benhamou, who I believe has repeatedly failed to acknowledge or
correct the conflicts of interest situation."
"Dan and Camillo have a background in Board leadership and deep
knowledge of the semiconductor industry. I believe these qualities will
enable them to enhance the effectiveness of the Board and support
Cypress management in capitalizing on the opportunities to increase
stockholder value during this challenging period for semiconductor
In light of his concerns about the conflicts and role of the Executive
Chairman, Rodgers delivered a demand pursuant to Section 220 of the
Delaware General Corporation Law for copies of Cypress's books and
records relating to transactions that appear, on their face, to be
breaches of the Board's fiduciary duties. In response to Cypress's
refusal to supply the books and records, Rodgers has filed a lawsuit to
compel production of these materials (see "About the Lawsuit" below).
Ray Bingham's Irreconcilable Conflicts of Interest
The Company's Executive Chairman, Ray Bingham, simultaneously serves as
one of two Founding Partners of Canyon Bridge Capital Partners, a
self-described private equity buyout group funded and backed by the
government of the People's Republic of China. Cypress and Canyon Bridge
compete head-to-head to acquire semiconductor companies in a time of
rapid consolidation in the semiconductor industry.
Cypress has acquired more than thirty semiconductor companies since
its inception in 1982 and acquisitions continue to be a major business
strategy of Cypress.
Canyon Bridge's pending $1.3 billion acquisition of U.S. programmable
logic maker Lattice Semiconductor, a company Cypress has attempted to
acquire on two previous occasions, clearly demonstrates that Canyon
Bridge competes directly with Cypress.
As Cypress's Executive Chairman, Ray Bingham has intimate knowledge of
the Company's M&A strategy and Rodgers believes that Bingham can use
that knowledge to benefit Canyon Bridge to the detriment of the
Company and its stockholders.
Bingham did not reveal his involvement with Canyon Bridge to the Board
when Lattice approached Cypress as a potential "white knight"
alternative to a transaction with Canyon Bridge. Rodgers believes that
the Board, including lead director Benhamou, failed to take appropriate
action when it learned about Bingham's leadership position as one of the
top two executives at Canyon Bridge, failed to take action when
approached by Rodgers about this conflict of interest and failed again
to address this issue by rejecting Rodgers' demand for books and records
relating to these matters.
Rodgers added, "The Board's failure to take decisive action upon
discovery of the conflict directly violates the Company's Code of
Business Conduct and Ethics, which sets forth crystal-clear policies on
conflicts of interest - seven of which have been violated by Bingham's
involvement with Canyon Bridge. Approved by the Board, Cypress's Code of
Business Conduct and Ethics is the cornerstone of the hard-earned,
pristine ethical reputation that Cypress has earned with its employees,
customers and stockholders for over 35 years. I believe that Bingham,
Benhamou and the Board have failed to live up to this code, and that
Bingham's divided loyalties hve put the entire Company's reputation for
ethical integrity at risk."
Ray Bingham's Excessive Compensation as Executive Chairman
Rodgers continued, "One of the Company's Core Values is, 'We do not
tolerate waste.' In direct violation of that principle, the Board
continues to support the excessive and unnecessary compensation of
Bingham as Executive Chairman, which I believe is a failure to act in
the best interest of stockholders."
Bingham is eligible to receive nearly $900,000 combined in yearly salary
and bonus, more than double the aggregate yearly estimated combined cash
compensation of the Company's five outside directors. In addition,
Bingham has received or will receive equity grants worth $4.5 million,
more than four times the yearly estimated combined equity awards granted
to the Company's five outside directors. The Executive Chairman position
was created as a temporary, short-term position to mentor the Company's
new CEO. At this point, Rodgers believes that the time spent on
mentoring has been minimal, that position should be eliminated given its
cost versus its benefit and that Bingham should receive normal
About the Director Nominees
J. Daniel McCranie is currently Chairman at ON
Semiconductor Corp. and previously served as Non-Executive Chairman at
Freescale Semiconductor (News - Alert), Inc. He has served on the Board of Directors at
Mentor Graphics Corp. since 2012. He served on the Board of Directors of
Cypress Semiconductor Corp. from 2005 through 2014. McCranie was
previously employed as Executive Vice President-Sales & Applications by
Cypress Semiconductor Corp. (News - Alert), President & Chief Executive Officer by
Virage Logic Corp., Vice President-Sales & Marketing by Cypress
Semiconductor Corp., and Chairman, President & Chief Executive Officer
by SEEQ Technology, Inc.
Camillo Martino has served as a member of the Board of
Directors of MagnaChip Semiconductor Corp. since August 2016. Martino
has served as a member of the Board of Directors of VVDN Technologies, a
private company, since March 2016 and as Vice Chairman of the Board of
Directors of SAI (News - Alert) Technology, Inc., a private company and leading
supplier of Secure Cloud Open Stack technology solutions for various
vertical markets, since April 2015. Previously, he served as director
and CEO of Silicon Image (News - Alert), Inc.; COO at SAI Technology Inc.; and
President, CEO and Director of Cornice Inc. He also served as Executive
Vice President and COO of DSP chipmaker Zoran Corporation. His career
began at National Semiconductor Corporation, where he held multiple
positions over a nearly 14-year tenure at the company.
About the Lawsuit
On January 19 2017, Rodgers served Cypress with a demand for books,
records and stocklist materials (the "Section 220 Demand") pursuant to 8
Del. C. § 220 ("Section 220"). The Section 220 Demand requested
inspection of documents and information related to i) Bingham's
affiliation with Canyon Bridge, ii) the Company and/or Canyon Bridge's
potential acquisition of Lattice, (iii) the Board and management's
compliance with the Code of Business Conduct and Ethics, and (iv) the
Company's list of stockholders and information regarding the 2017 annual
meeting. The purpose of the Section 220 Demand was primarily to
investigate breaches of fiduciary duty by Bingham and the Board,
identify what steps, if any, the Board has taken to remedy these
breaches, and determine if, and what, additional steps need to be taken
to protect the Company from harm associated with these breaches.
On January 26, 2017 - and in violation of Section 220 - Cypress refused
to produce books and records in response to the Section 220 Demand.
Faced with continued Cypress Board intransigence, Rodgers filed a
lawsuit on January 27, 2017 to compel production of these materials. The
case is captioned Rodgers v. Cypress Semiconductor Corp., C.A. No.
2017-0070, in the Court of Chancery of the State of Delaware.
Prior to initiating the lawsuit and nominating directors, Rodgers sent
multiple letters to the Cypress Board in an effort to engage in a
private conversation about resolving these issues in Cypress's best
interest. However, the Board ignored the letters, rejected the Section
220 Demand, and has taken no action to address the concerns Rodgers has
Rodgers then tried to resolve these issues privately with the Cypress
Board and reach a settlement that would avert the need to make his
concerns public. After perfunctory interviews of the two nominees,
however, the Cypress Board responded only with a hasty "settlement
proposal" that failed to address the two main issues raised in the
lawsuit directly, either with a proposed process for addressing those
issues in the future or with a proposed structure that enable those
issues to be addressed.
Rodgers concluded, "Cypress is a company that was built to last for the
long term through a commitment on the part of every employee to 'do what
is right for Cypress,' one of our Core Values. I believe the current
Board has failed to honor that commitment. As a concerned stockholder
and a believer in both the Core Values and the Cypress Code of Business
Conduct and Ethics, I've nominated two highly qualified directors to put
Cypress back on the right track."
Additional Information and Where to Find It
T.J. Rodgers is the co-founder of the Company. Rodgers, J. Daniel
McCranie and Camillo Martino are participants in the solicitation of
proxies from stockholders in connection with the 2017 Annual Meeting of
Stockholders (the "Annual Meeting") of the Company. Rodgers intends to
file a proxy statement (the "Proxy Statement") with the Securities and
Exchange Commission (the "SEC (News - Alert)") in connection with his solicitation of
proxies for the Annual Meeting. No decision has been made by the
participants at this time as to any response by the participants to the
Company's consent solicitation relating to certain corporate governance
Rodgers owns or controls voting of 8,625,619 shares of the Company's
common stock. Neither of the other participants owns or controls voting
of any shares of the Company's common stock. Additional information
regarding such participants, including their direct or indirect
interests, by security holdings or otherwise, will be included in the
Proxy Statement and other relevant documents to be filed with the SEC in
connection with the Annual Meeting.
Promptly after filing its definitive Proxy Statement with the SEC,
Rodgers intends to mail the definitive Proxy Statement and a proxy card
pursuant to applicable SEC rules. STOCKHOLDERS ARE URGED TO READ THE
PROXY STATEMENT (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND
ANY OTHER RELEVANT DOCUMENTS THAT RODGERS WILL FILE WITH THE SEC WHEN
THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
Stockholders may obtain, free of charge, copies of the definitive Proxy
Statement and any other documents filed by Rodgers with respect to the
Company with the SEC in connection with the Annual Meeting or, if
applicable, any response by the participants to the Company's consent
solicitation, at the SEC's website (http://www.sec.gov).
In addition, copies of such materials, when available, may be requested
free of charge from Rodgers's proxy solicitor, MacKenzie Partners, Inc.,
105 Madison Avenue, New York, NY 10016 or toll-free at (800) 322-2885.
About T.J. Rodgers
T.J. Rodgers co-founded Cypress Semiconductor Corporation in 1982 and
served as the Company's President and Chief Executive Officer until
April 2016 and as a member of its Board of Directors until August 2016.
He is a former chairman of the Semiconductor Industry Association (SIA)
and SunPower Corp. and currently sits on the boards of directors of
high-technology companies, including Bloom Energy (fuel cells), Enphase
(solar energy electronics), WaterBit (precision agriculture) and Enovix
(silicon lithium-ion batteries). He has been honored for his
foundational support over a 20-year period of the Second Harvest Food
Bank of Santa Clara and San Mateo Counties and the California
Association of African American Educators. Rodgers received his
bachelor's degree from Dartmouth College, graduating as salutatorian
with majors in chemistry and physics. He received his master's degree
and Ph.D. in electrical engineering from Stanford University. While
pursuing his Ph.D. degree, Rodgers invented the VMOS process technology,
which he later licensed to American Microsystems, Inc.
View source version on businesswire.com: http://www.businesswire.com/news/home/20170217005593/en/
[ Back To TMCnet.com's Homepage ]