Acacia Research Corporation · NASDAQ:ACTG
Acacia Research — Proxy Contest (May 2018)
25 slides from Acacia Research's proxy contest presentation, May 30, 2018
Slide 1: Acacia Research Corporation's False and Misleading Claims
Sidus Group Acacia Research Corporation’s False and Misleading Claims May 30, 2018
Slide 2: Disclaimer
Disclaimer This presentation is for discussion and general informational purposes only. It does not have regard to the specific investment objective, financial situation, suitability, or the particular need of any specific person who may receive this presentation, and should not be taken as advice o
Slide 3: The Absolute Failure of the Acacia Board
The Absolute Failure of the Acacia Board Stockholders of public companies are entitled to expect a basic governance framework: • An independent and prudent board of directors • Overseeing a well-qualified CEO • Executing a clearly articulated business strategy. Now, two years into the Graziadio
Slide 4: Acacia's Contrived TSR Claims
Acacia’s Contrived TSR Claims “Been Down So Long It Looks Like Up To Me” Coming up with rationalizations for a 93% decline in stock price is hard, and even more difficult when Board members – including Graziadio and Walsh – have been benefiting from extravagant compensation practices. We doubt s
Slide 5: Sustained Stockholder Value Destruction Has Been Devastating
Sustained Stockholder Value Destruction Has Been Devastating 1-, 3-, 5- and 10-Year Total Shareholder Return1 1-Year 3-Year 5-Year 10-Year ACTG -34.4% -65.0% -86.6% -32.4% NASDAQ Composite Index 22.2% 49.5% 130.2% 249.2% NASDAQ-100 Technology 29.1% 85.9% 197.0% 319.4% Sector Index Nearly 87% Stock P
Slide 6: Acacia Cannot Hide The Dramatically Better Performance of its RPX Peer Group
Acacia Cannot Hide The Dramatically Better Performance of its RPX Peer Group Acacia contrives its peer group from the RPX selection of peers. Of its true RPX peers, its stock performance is the worst by far Public PAE Overview Stock Market Cap Market Cap SG&A Price (As of (As of Employees Employees
Slide 7: The Company Historically Claimed Patent Reform is Fundamentally Good for Acacia's Business
The Company Historically Claimed “Patent Reform is Fundamentally Good for Acacia’s Business” Acacia now points to the AIA Act as the nexus of its demise – it was enacted in September, 2011. Acacia embraced this legislation and incorporated it into its business model. Acacia was still promoting regul
Slide 8: Acacia's Board Has A Demonstrated Record of Capital Destruction
Acacia’s Board Has A Demonstrated Record of Capital Destruction – A Negative Outlier in the Field of PAE Company Paid In Capital* Enterprise Value Patent Licensing Royalties R&D Spend SG&A Expense per Employee (31 March 2018) (FY 2017) (LTM) ($ 000) ACTG 649 38 65.4 1 1,938.5 IDCC 673 1,745.9 512.4
Slide 9: Here We Go Again – Scattershot All Over
Here We Go Again – Scattershot All Over From Acacia’s 2018 Annual Meeting Presentation: Acacia has just 13 employees and lists in the Form 10-K a total of 53 separate technology areas in which it has made investments, ranging from Knee Replacement Technology to Online Auction Guarantee Technology
Slide 10: Graziadio Has Stabilized Acacia – at Rock Bottom
Graziadio Has Stabilized Acacia – at Rock Bottom Graziadio claims to have stabilized Acacia, but unfortunately for Acacia stockholders, he stabilized the Company by letting it hit rock bottom, trading even below cash value. As of March 31, 2018, Acacia was trading at a market capitalization of $
Slide 11: Graziadio and Walsh Have Been Spared the Consequences of Value Destruction
Graziadio and Walsh Have Been Spared the Consequences of This Devastating Value Destruction and Falsely Claimed They Are Aligned with Stockholders Acacia refers to stock purchases by Graziadio (and his family trust) and Walsh as a validation of their commitment to the strategy. “During this critic
Slide 12: "Country Club" Governance Principles
“Country Club” Governance Principles In order to mask the fact that the Nominating and Governance Committee met only once a year for TEN YEARS, the Acacia Board makes the outrageous claim to have held dozens of informal meetings and “worked methodically over 18 months to identify and vet two new boa
Slide 13: The Ties That Bind
The Ties That Bind The Acacia Boardroom and the Country Club “Friends of Lou”: Louis Graziadio, his family Trustee and long-time business associate (James Sanders, Acacia Director), and their previously undisclosed Board “advisor,” Tom Bruderman Considering his background, it is perhaps understand
Slide 14: Rewriting History: The Evolution & Purpose of the Profits Interest Plan
Rewriting History: The Evolution & Purpose of the Profits Interest Plan February 16, 2017, AIP Operation LLC, an indirect subsidiary of Acacia, adopts a Profits Interest Plan: Acacia adopted a Profits Interest Plan that provides for the grant of equity interests in AIP to certain members of manageme
Slide 15: AIP = "All Insiders Profit"
The Profits Interest Plan Gets Worse and Worse: AIP = “All Insiders Profit” Acacia stockholders began fiscal year 2017 owning 100% of the Veritone warrant. Six weeks later, it had been contributed to the PIP, and only 60% still belonged to Acacia stockholders. On the basis of accepted option valua
Slide 16: Graziadio & Walsh are Architects of Outlandish Compensation
Graziadio & Walsh are Architects of Outlandish Compensation Walsh was on the Compensation Committee when the PIP was created on February 16, 2017. Before April 2018, the Chair of the Compensation Committee was never disclosed, but we believe Graziadio and Walsh have both led the committee. Walsh
Slide 17: Acacia's Board is Focused on the Wrong Things
Acacia’s Board is Focused on the Wrong Things The only thing Acacia’s directors ?? are actively engaged in is determining how best to enrich and entrench themselves. We find it very telling that the Compensation Committee held 38 meetings from 2013 through 2017 while the Nominating and Governance Co
Slide 18: Acacia's Board Has No Business Plan: Bitzumi Investment
Is Acacia Acacia’s Board Forgetting Has about theNo Business Ill-Fated Strategy Bitzumi Investment? ?? • After Acacia issued a press release saying it was investing in Bitzumi, Michael Barone from Sidus called Rob Stewart from Acacia on February 15, 2018 to discuss this investment and indicated that
Slide 19: Acacia's Tortured Explanation of Excessive Compensation
Acacia’s Tortured Explanation of Excessive Compensation How can Acacia claim its executive compensation is tied to “high-value goals and stockholder value” when the Company has been rewarding management with excessive compensation for the Company’s woeful 1-, 3-, 5- and 10-year TSR performances? 19
Slide 20: Acacia's Self-Serving "Settlement Offers"
Acacia’s Self-Serving “Settlement Offers” We question whether adding a single stockholder representative in this context is sufficient to reorient this Board. In our view, the subtraction of Graziadio and Walsh is just as important as the addition of our two stockholder nominees. We remind Acaci
Slide 21: Don't Take Our Word For It
Don’t Take Our Word For It Those who have worked alongside both Mr. Tobia and Mr. Press can attest to the value they add to the boards they serve on Alfred V. Tobia Jr. Clifford Press “We were very impressed with Al Tobia’s ability to “Clifford was engaged from the start, coming in with no bridge th
Slide 22: Acacia is Trying to Rewrite History With Some of its Fictitious and Outrageous Claims
Acacia is Trying to Rewrite History With Some of its Fictitious and Outrageous Claims Acacia Fiction Sidus Reality “…we are often battling companies much larger than Acacia makes the most ridiculous excuse we’ve ever heard Acacia and seeking hundreds of millions in fees or to justify a classified bo
Slide 23: Acacia is Trying to Rewrite History With Some of its Fictitious and Outrageous Claims
Acacia is Trying to Rewrite History With Some of its Fictitious and Outrageous Claims Acacia Fiction Sidus Reality “Sidus and BLR criticize the appointment of these All 4 directors have been appointed to the Board and have objective, independent directors and attempt to impugn never been elected by
Slide 24: Acacia is Trying to Rewrite History With Some of its Fictitious and Outrageous Claims
Acacia is Trying to Rewrite History With Some of its Fictitious and Outrageous Claims Acacia Fiction Sidus Reality “Acacia’s Decisive Response to a Changing Acacia failed to recognize the industry changes and Industry” actually believed the 2011 America Invents Act decision was good for its business
Slide 25: Contacts / How to Vote
Contacts / How to Vote Media Contact: Sloane & Company Joe Germani / Kristen Duarte, 212-486-9500 jgermani@sloanepr.com / kduarte@sloanepr.com 25