NEW YORK - Investment advisor Rubric Capital Management LP, which manages funds owning approximately 9.0% of Xperi (NASDAQ:ADEA) Inc.'s common stock, has called for significant changes to the company's board of directors.
In a definitive proxy statement filed with the SEC, Rubric nominated Thomas A. Lacey and Deborah S. Conrad for election to Xperi's board at the upcoming annual stockholders' meeting on May 24, 2024.
Rubric's letter to Xperi stockholders highlights a history of operational underperformance, excessive executive compensation, and poor capital allocation under the current board. The investment advisor urges stockholders to support its nominees, who it believes can reverse the company's fortunes and rebuild value for shareholders.
The letter criticizes the company's financial results since its spin-off from its predecessor on October 1, 2022, noting that Xperi's shares have underperformed compared to benchmarks like the S&P Software Index and the Russell 3000.
Rubric contrasts this with the performance of Xperi under the leadership of their nominee Thomas A. Lacey, who previously served as CEO and delivered returns that outpaced the Russell 3000.
Rubric also points to Xperi's margin performance, which lags behind peers despite higher gross margins, attributing this to an excessive expense structure. The letter suggests that aligning Xperi's margins with peers could significantly increase the company's share value.
The investment advisor condemns the current board's compensation practices, highlighting the issuance of over 4.2 million RSUs to insiders and a stock-based compensation expense of approximately $70 million in 2023. This compensation occurred despite modest revenue growth and a reduction in EBITDA guidance.
Moreover, Rubric criticizes Xperi's capital allocation decisions, including the handling of investments in Perceive Corporation and the sale of its AutoSense division to Tobii AB, which they view as indicative of poor decision-making.
Rubric expresses confidence that their nominees, Lacey and Conrad, with their leadership and expertise, can address operational issues, align executive compensation with shareholder interests, and improve capital allocation. The letter ends by urging stockholders to vote for these changes using the WHITE proxy card provided.
This call for board changes at Xperi is based on a press release statement from Rubric Capital Management LP.
InvestingPro Insights
As Xperi Inc. faces a pivotal moment with Rubric Capital Management's push for board changes, investors are considering the company's financial health and future prospects. According to real-time data from InvestingPro, Xperi Inc. holds a market capitalization of approximately $438.14 million USD.
Despite concerns raised by Rubric, Xperi's gross profit margins remain impressive at 77.25% for the last twelve months as of Q4 2023, indicating a strong ability to control costs relative to its revenue.
InvestingPro Tips reveal that Xperi is not currently paying dividends, which may be a consideration for income-focused investors. Still, analysts predict that the company will become profitable this year, suggesting potential for future financial improvement. Moreover, Xperi holds more cash than debt on its balance sheet, providing a degree of financial stability amidst the operational criticisms highlighted by Rubric.
Investors looking to delve deeper into Xperi's financials and future outlook can find an additional 6 InvestingPro Tips on InvestingPro's detailed analysis. To access these insights and more, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With these tools at their disposal, shareholders can make a more informed decision ahead of the upcoming annual stockholders' meeting.
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