Nominees J. Daniel McCranie and Camillo Martino Will Help Board Eliminate Ethical and Corporate Governance Violations and Restore Compliance with Company’s Code of Business Conduct and Ethics
Cypress’s Purported Changes to Strengthen Corporate Governance are Just An Attempt to Prevent Even Extraordinarily Qualified New Directors from Joining the Board
Rodgers Sues Cypress Board to Obtain Books and Records Relating to Executive Chairman Ray Bingham’s Irreconcilable Conflicts of Interest
Bingham’s Entanglement with Chinese Government-Backed Private Equity Firm that Competes with Cypress Presents Tangible Current Risk to Cypress Stock Value
SAN JOSE, Calif. — (BUSINESS WIRE) — February 17, 2017 — 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 companies.”
In light of his concerns about the conflicts and role of the Executive Chairman, Rodgers delivered a demand pursuant to Section 220 of the Delaware General Corporation Law for copies of 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 have put the entire Company’s reputation for
ethical integrity at risk.”