Onespan Inc. · NASDAQ:OSPN
Onespan — Proxy Contest (May 2021)
154 slides from Onespan's proxy contest presentation, May 18, 2021
Slide 1: ProtectOneSpan.com May 2021
May 2021 ProtectOneSpan.com
Slide 2: Table of Contents
Table of Contents 1 Executive Summary 2 TSR Performance and Relative Valuation 3Table of Contents Poor Investor Communications and Financial Disclosures 4 Ineffective Strategic Oversight and Capital Allocation 5 Inadequate Self-Refreshment and Governance Concerns 6 Misaligned Executive Compensation
Slide 3: Legion Partners
Section Legion Partners 1 Strategic Stock Selection $577 • High-quality businesses trading at a significant discount relative to their intrinsic value million1 Assets under • Small-cap companies which offer the greatest upside potential management • Concentrated, high-conviction portfolio based on r
Slide 4: Legion Partners’ Track Record in Software and Hardware
Section Legion Partners’ Track Record in Software and Hardware 1 Legion Partners has extensive experience investing in the technology space, including the software and hardware sectors Software and Hardware ShoreTel (SHOR) Mitel (MITL) Globalstar (GSAT) Former Investment Former Investment Current In
Slide 5: This proxy contest is about addressing a deeply ingrained, insular Board
Section 1 This proxy contest is about addressing a deeply ingrained, insular Board that has done the bare minimum and defensively added new directors with largely irrelevant skillsets and personal connections in order to protect the status quo It is not simply about corporate structure or one or two
Slide 6: Legion’s Nominees Are Aligned with OneSpan’s Future
Section Legion’s Nominees Are Aligned with OneSpan’s Future 1 We have recruited a world-class group of technologists, operators, executives and investors who have overseen, led and invested in numerous successful modern public software and hardware companies Sarika Garg Rinki Sethi ▪ World-renowned
Slide 7: Our Nominees Bring a Relevant Track Record of Success
Section Our Nominees Bring a Relevant Track Record of Success 1 “I’ve spent over a decade at SAP, including in the Office of the CEO, and witnessed firsthand the company’s transition from perpetual licensing to a cloud-based business model. Given the tremendous size of the company, I was involved in
Slide 8: OneSpan (OSPN) – Overview
Section OneSpan (OSPN) – Overview 1 OneSpan (OSPN) is a leading mobile & identity cybersecurity and eSignature software provider to the world’s largest financial institutions ▪ 10,000+ customers, including 70 of the top 100 global banks ▪ Transitioning to Software & Services (“Software”) with a focu
Slide 9: Why Did We Invest in OneSpan?
Section Why Did We Invest in OneSpan? 1 We believe OSPN stock has tremendous valuation potential ✓ Underfollowed transition story with attractive Software growth driving significant margin expansion ✓ Exceptionally strong customer base with trusted relationships ✓ New cloud-based platform enables si
Slide 10: Why Are We Here?
Section Why Are We Here? 1 ▪ OSPN currently trades at ~70% valuation discount to peers and its total shareholder returns (“TSR”) has severely underperformed across 1, 3, 5, 10, and 15-year periods¹ ▪ We believe Hardware detracts from OSPN’s true valuation by overshadowing Software OSPN Stock Has Bee
Slide 11: OneSpan’s TSR Has Severely Underperformed
Section OneSpan’s TSR Has Severely Underperformed 1 OSPN stock has underperformed several pertinent peer groups, including the Company’s self-selected Fiscal 2020 Form 10-K peer group, and broader market indices over multiple time periods through the Unaffected Date (2/24/21) OSPN Relative Total Sha
Slide 12: The Right OneSpan Peer Sets
Section The Right OneSpan Peer Sets 1 Legion utilizes three major peer sets: Cybersecurity Peers, Direct Software Peers, and Company Peers ▪ Cybersecurity Peers: cybersecurity public peers of meaningful size ($500mm+ market capitalization), many of whom sell both software (all deployment types) and
Slide 13: OneSpan’s Own TSR Scorecard Appears to be an “F”
Section OneSpan’s Own TSR Scorecard Appears to be an “F” 1 The Company’s TSR analysis from their Fiscal 2020 Form 10-K This is not “admirable” 13 Source: OSPN 2020 10-K, OSPN Letter to Stockholders (5/10/21) CONFIDENTIAL & PROPRIETARY
Slide 14: OSPN’s Valuation Continues to Lag
Section OSPN’s Valuation Continues to Lag 1 OneSpan’s valuation continues to trade near the bottom of Cybersecurity Peers at a ~70% discount Cybersecurity Peers - 2021E Enterprise Value / Revenue 40.0x 35.5x 35.0x 31.5x 31.5x 29.9x 30.0x 25.0x 20.0x 15.0x Average: 12.4x 11.6x 10.2x 10.2x 9.5x 10.0x
Slide 15: Board Has Mischaracterized its Track Record
Section Board Has Mischaracterized its Track Record 1 The Board has misleadingly claimed “admirable” performance and extensive engagement with Legion ▪ Misleading Claim #1: OSPN stock “outperformed our peers” since Legion invested, and has “performed admirably” versus peers on a 1, 2, and 3-year bas
Slide 16: We Believe Multiple Issues Weigh on OSPN’s Valuation
Section We Believe Multiple Issues Weigh on OSPN’s Valuation 1 The Board has been unable or unwilling to oversee an evolution of relevant skillsets that align with the Company’s go-forward strategy ▪ No Credible Plan to Fix Valuation: We believe refusal to acknowledge OSPN’s discounted valuation in
Slide 17: Poor Oversight Has Led to a Significantly Delayed Transition
Section Poor Oversight Has Led to a Significantly Delayed Transition 1 While the actual transition to recurring revenue began in earnest a few years ago, the Company has been attempting this transition for well over a decade but seemingly did not understand what that meant or entailed ▪ Despite the
Slide 18: Hardware Overshadows Steady Software Performance
Section Hardware Overshadows Steady Software Performance 1 Hardware revenue declined 36% in 2020, creating an ugly consolidated picture that likely dissuades many investors from buying the stock OSPN Total Revenue OSPN ARR $110 +29% Y/Y $270 $104 +27% Y/Y $255 $100 $96 $250 +29% Y/Y (15%) Y/Y $90 $9
Slide 19: Hardware – Volatile and Long-Term Secular Decline
Section Hardware – Volatile and Long-Term Secular Decline 1 While Hardware experiences occasional annual growth due to refresh cycles (typically every 5-7 years) or regulatory-driven demand, OneSpan acknowledges the segment’s long-term secular decline We do believe that over time, the hardware Hardw
Slide 20: Legion Has Counseled Management in Absence of Board Leadership
Section Legion Has Counseled Management in Absence of Board Leadership 1 In an effort to help OSPN management better highlight the Company’s value in the public markets, Legion has spent considerable time and effort advising management on how to communicate a modern software story to investors ▪ Leg
Slide 21: Capital Allocation Experience is Critically Needed
Section Capital Allocation Experience is Critically Needed 1 The Board has had a strong historical preference for M&A, though we have not witnessed a clear justification for this focus nor has the Board demonstrated long-term accretive returns to stockholders from these acquisitions ▪ 97% of capital
Slide 22: G&A Appears Bloated – A Legacy of Poor Oversight?
Section G&A Appears Bloated – A Legacy of Poor Oversight? 1 G&A expenses appear high relative to Cybersecurity Peers, and we believe poorly integrated acquisitions and Hardware are causing an overly complicated corporate structure Non-GAAP G&A as % of Revenue 25.0% 21.5% In the coming months, we wil
Slide 23: Poorly Designed Executive Compensation Seems Like a Key Culprit
Section Poorly Designed Executive Compensation Seems Like a Key Culprit 1 OSPN’s executive compensation plan seems to incentivize Hardware and legacy perpetual licensing revenue over recurring Software revenue – inconsistent with the Company’s transition Chairman John Fox has been Chair of the Compe
Slide 24: To Fix the Stock, We Must Fix the Board
Section To Fix the Stock, We Must Fix the Board 1 We are seeking to replace FOUR incumbent directors, the majority of whom have presided over long periods of underperformance and appear to lack experience at modern software and hardware public companies No comparable operating experience at a soft
Slide 25: OneSpan Stakeholders Deserve New Board Leadership
Section OneSpan Stakeholders Deserve New Board Leadership 1 We believe OneSpan management, employees, customers and stockholders all deserve new leadership that is highly experienced in leading and overseeing modern public software and hardware companies ▪ C-Level Operational Experience To help succ
Slide 26: Our Nominees Bring the Right Skills Sets to OSPN
Section Our Nominees Bring the Right Skills Sets to OSPN 1 OneSpan’s incumbent directors are far outmatched by Legion’s nominees’ backgrounds and experiences pertinent to the Company’s go-forward strategy Modern Software Experience Other Public Incumbent Director, Age Tenure Industry Hardware C-Leve
Slide 27: We Question the Qualifications and Fit of Recent Additions
Section We Question the Qualifications and Fit of Recent Additions 1 The Board will tout their most recent additions as “cloud leaders” though most come from low-growth, legacy technology firms, have duplicative backgrounds and have prior connections to existing Board members Recently Added OSPN Dir
Slide 28: Board’s Engagement Has Been Minimal and Disingenuous
Section Board’s Engagement Has Been Minimal and Disingenuous 1 The Board has rejected numerous high-quality, diverse candidates and seems to have disingenuously engaged with Legion for years Candidate Diversity Legion Candidate / Year Introduced Company / Industry Background Board Response Gender Ra
Slide 29: Concentration of Power Remains a Problem
Section Concentration of Power Remains a Problem 1 Longstanding Board members controlled key leadership positions for decades – though Legion’s public involvement sparked a flurry of rushed and defensive actions, the real power in the boardroom has not changed and, most importantly, performance has
Slide 30: A Pattern of Reactive Maneuvers Appears Due to Legion Pressure
Section A Pattern of Reactive Maneuvers Appears Due to Legion Pressure 1 Legion Actions OneSpan Board Reactions Over past three years, introduced seven high-quality director Rejected Legion candidates and defensively added new directors candidates and offered four settlement agreements with question
Slide 31: We Believe New Leadership Can Unlock Tremendous Value
Section We Believe New Leadership Can Unlock Tremendous Value 1 We believe our four nominees will take a holistic approach towards closing the persistent valuation gap that has plagued OSPN’s stock OSPN Sum-of-the-Parts ("SOTP") Analysis $60.00 $50.00 $44.01 $38.00 $39.00 $40.00 $30.00 $24.03 $25.33
Slide 32: The Time Has Come to #ProtectOneSpan
Section The Time Has Come to #ProtectOneSpan 1 We urge fellow stockholders to vote the WHITE proxy card to elect strong and proven technology leaders to the Board ▪ Our nominees will seek to apply a holistic approach to fixing OSPN’s valuation: ✓ Improve financial disclosures, including separating S
Slide 33: Table of Contents
Table of Contents 1 Executive Summary 2 TSR Performance and Relative Valuation 3Table of Contents Poor Investor Communications and Financial Disclosures 4 Ineffective Strategic Oversight and Capital Allocation 5 Inadequate Self-Refreshment and Governance Concerns 6 Misaligned Executive Compensation
Slide 34: OneSpan’s TSR Has Severely Underperformed
Section OneSpan’s TSR Has Severely Underperformed 2 OSPN stock has underperformed several pertinent peer groups, including the Company’s self-selected Fiscal 2020 Form 10-K peer group, and broader market indices over multiple time periods through the Unaffected Date (2/24/21) OSPN Relative Total Sha
Slide 35: OSPN TSR Ranks Poorly vs. All Cybersecurity Peers
Section OSPN TSR Ranks Poorly vs. All Cybersecurity Peers 2 1 Year 3 Year 5 Year ZS 301% OKTA 640% VRNS 999% NET 286% VRNS 244% CRWD 273% FTNT 522% SAIL 158% FTNT 241% RPD 496% VRNS 131% RPD 223% OKTA 113% MIME 354% CYBR 205% MITK 67% SAIL 192% CYBR 324% FTNT 56% TENB 56% PANW 123% QLYS 323% PANW 56
Slide 36: OSPN TSR Ranks Poorly vs. All Direct Software Peers
Section OSPN TSR Ranks Poorly vs. All Direct Software Peers 2 1 Year 3 Year 5 Year ZS 301% OKTA 640% VRNS 999% NET 286% CRWD 273% VRNS 244% DOCU 177% QLYS 323% VRNS 131% NICE 123% OKTA 113% SPLK 317% DT 57% OSPN 94% OSPN 34% NICE 28% NICE 224% SPLK 60% PING 23% QLYS 14% OSPN 70% QLYS 35% SPLK (5%) 3
Slide 37: OneSpan’s Own TSR Scorecard Appears to be an “F”
Section OneSpan’s Own TSR Scorecard Appears to be an “F” 2 The Company’s TSR analysis from their Fiscal 2020 Form 10-K OSPN stock has severely underperformed the Company’s own hand- selected peers and indices 37 Source: OSPN 2020 10-K CONFIDENTIAL & PROPRIETARY
Slide 38: Incumbent Directors Have Poor TSR Track Records
Section Incumbent Directors Have Poor TSR Track Records 2 OSPN Relative TSR over Tenure vs. Cyber- Direct MSCI Director, Age Tenure security Software Company Russell ACWI / Position (Years) Peers Peers Peers 3000 Software IGV NASDAQ John Fox, 77 Chairman and 16 (637%) (635%) (324%) 12% (437%) (640%)
Slide 39: We Believe the Board is Misrepresenting its TSR Track Record
Section We Believe the Board is Misrepresenting its TSR Track Record 2 The Company claims that “over the last three years, our stock price has more than doubled” and outperformed the NASDAQ – however, we see no significance of the date the Board used for this calculation (4/16/21) OSPN Relative TSR
Slide 40: Cherry-Picked Date Seems to be Only Way to Support Board’s Outperformance Claim
Cherry-Picked Date Seems to be Only Way to Support Board’s Section 2 Outperformance Claim Company’s selection of 4/16/21 to claim it outperformed the NASDAQ is true during ~5% of the 760 days since Legion invested in OSPN 719 Trading Days where OSPN neither outperformed the NASDAQ nor doubled versus
Slide 41: Investors Seem Excited for Change
Section Investors Seem Excited for Change 2 The Company’s randomly selected TSR date of 4/16/21 appears to have benefited greatly from the launch of Legion Partners’ public campaign TSR since Launch of Legion’s Campaign OSPN 17% MSCI 6% ACWI/Software Russell 3000 6% “The [Company’s] letter further u
Slide 42: The Board Believes it Has Delivered Value for Legion Partners
Section The Board Believes it Has Delivered Value for Legion Partners 2 The Company claims that “from the time Legion first invested, in April 2018, we have outperformed our peers from a TSR perspective” – however, the Board utilized median TSR performance, not average – utilizing the average is a w
Slide 43: The Board Believes its Underperformance is “Admirable”
Section The Board Believes its Underperformance is “Admirable” 2 The Company claims that “for the rest of our stockholders, we have performed admirably over the one-, two- and three-years ended April 30, 2021” – the Company again uses the peer median from the Proxy Statement Peers, not peer average
Slide 44: OSPN vs. Cybersecurity Peers – 2021E EV / Revenue
Section OSPN vs. Cybersecurity Peers – 2021E EV / Revenue 2 Despite the transition nearing completion, OneSpan continues to trade near the bottom of Cybersecurity Peers at a ~70% discount to the average Cybersecurity Peers - 2021E EV/Revenue 40.0x 35.5x 35.0x 31.5x 31.5x 29.9x 30.0x 25.0x 20.0x 15.0
Slide 45: OSPN Recurring Revenue vs. Direct Software Peers – EV / ARR
Section OSPN Recurring Revenue vs. Direct Software Peers – EV / ARR 2 We believe backing out the value of all legacy and non-recurring revenue (Hardware, perpetual licensing and professional services) implies a steep ~70% discount in EV / ARR relative to direct recurring revenue software peers OSPN
Slide 46: Direct Comparison to Select Recurring Revenue Peers
Section Direct Comparison to Select Recurring Revenue Peers 2 Diving deeper into the operating performance and valuation of OneSpan’s most comparable peers further reveals a disconnected valuation OneSpan DocuSign nCino Alkami Varonis Dynatrace Qualys Company (OSPN) (DOCU) (NCNO) (ALKT) (VRNS) (DT)
Slide 47: Why is OSPN Trading at a ~70% Discount to Peers?
Section Why is OSPN Trading at a ~70% Discount to Peers? 2 ▪ We believe there are several reasons behind OSPN’s discounted valuation: o We believe the Company has low credibility with investors given recent debacles on earnings calls, including a 40% drop in the stock price in a single day following
Slide 48: Case Study: Nuance (NUAN)
Section Case Study: Nuance (NUAN) 2 Nuance divested its legacy, declining and low-margin divisions to become a pure-play, growing software company focused on conversational artificial intelligence technology – following board refreshment and the strategic moves, the growth profile of the company vas
Slide 49: We Believe a ~40% Discount to Peers Implies ~75% Upside
Section We Believe a ~40% Discount to Peers Implies ~75% Upside 2 Average ARR growth for direct software peers is 40%, resulting in an average EV / ARR of 21.7x – given OSPN ARR is growing roughly 30% per annum, we conservatively assign a ~40% discount, 13.5x EV / ARR, as profitability is unclear 20
Slide 50: We Believe a ~20% Discount to Peers Implies ~120% Upside
Section We Believe a ~20% Discount to Peers Implies ~120% Upside 2 However, by using a 17.5x EV / ARR, which assumes comparable long-term economics to peers and is closer to the peer average (but still a ~20% discount), we see additional significant upside in the near term 2021E Sum-of-the-Parts Ana
Slide 51: Long-Tenured Directors Have Been Net Sellers at Low Prices
Section Long-Tenured Directors Have Been Net Sellers at Low Prices 2 While Founder Ken Hunt was on the Board, he was an aggressive seller of OSPN stock – in addition, it does not appear that Chairman John Fox and Directors Jean Holley and Matthew Moog have ever purchased OSPN stock in the open marke
Slide 52: Table of Contents
Table of Contents 1 Executive Summary 2 TSR Performance and Relative Valuation 3Table of Contents Poor Investor Communications and Financial Disclosures 4 Ineffective Strategic Oversight and Capital Allocation 5 Inadequate Self-Refreshment and Governance Concerns 6 Misaligned Executive Compensation
Slide 53: Two Transitions Both Poorly Communicated
Section Two Transitions Both Poorly Communicated 3 We believe OneSpan has failed to clearly communicate its results, guidance, the overall business model and the transition story ▪ OneSpan is a transition story that contains two distinct transitions o The legacy Hardware authenticator token business
Slide 54: OneSpan’s Financials are Still Messy
Section OneSpan’s Financials are Still Messy 3 Hardware and Software is mixed on the GAAP income statement – while the Company began supplemental disclosures to further declassify software licensing revenue, there is still no transparency on overall Software profitability “Product and license” conta
Slide 55: Hardware Overshadows Steady Software Performance
Section Hardware Overshadows Steady Software Performance 3 Hardware revenue declined 36% in 2020, creating an ugly consolidated picture that likely dissuades many investors from buying the stock OSPN Total Revenue OSPN ARR $110 +29% Y/Y $270 $104 +27% Y/Y $255 $100 $96 $250 +29% Y/Y (15%) Y/Y $90 $9
Slide 56: Hardware – Volatile and Long-Term Secular Decline
Section Hardware – Volatile and Long-Term Secular Decline 3 While Hardware experiences occasional annual growth due to refresh cycles (typically every 5-7 years) or regulatory-driven demand, OneSpan acknowledges the segment’s long-term secular decline We do believe that over time, the hardware Hardw
Slide 57: Hardware – Quarterly Volatility
Section Hardware – Quarterly Volatility 3 While there is some degree of “seasonality” to Hardware revenue, the segment is incredibly volatile and unpredictable Sequential Change in Hardware Revenue 50% 45% 41% 40% 35% 30% 21% 23% 20% 20% 16% 16% 9% 10% 10% 5% 0% (10%) (10%) (20%) (20%) (30%) (25%) (
Slide 58: Hardware Volatility Drives Stock Price Volatility
Section Hardware Volatility Drives Stock Price Volatility 3 The Board has overseen numerous precipitous drops in the stock price, even when the Company produces commendable Software results, given Hardware’s quarter-to-quarter unpredictability which has an outsized near-term impact to GAAP Revenue a
Slide 59: Legion Has Counseled Management in Absence of Board Leadership
Section Legion Has Counseled Management in Absence of Board Leadership 3 In an effort to help OSPN management better highlight the Company’s value in the public markets, Legion has spent considerable time and effort advising management on how to communicate a modern software story to investors ▪ Leg
Slide 60: Legion Recommendation: ARR Disclosure
Section Legion Recommendation: ARR Disclosure 3 Annual Recurring Revenue is a commonly used software revenue metric which annualizes the total contract value of all recurring contracts (>1 year in length) – this figure is critical for software investors as it helps cut through GAAP messiness of diff
Slide 61: Legion Recommendation: DBNE Disclosure
Section Legion Recommendation: DBNE Disclosure 3 Dollar-based Net Expansion Rate represents the increase in ARR from existing customers a year prior, net of dollar-based churn – this figure showcases how much growth is coming from existing customers, thus providing a sense of growth sustainability L
Slide 62: Legion Recommendation: Key Quarterly Software Stats
Section Legion Recommendation: Key Quarterly Software Stats 3 We recommended a clean summary page that highlights key Software metrics’ performance Legion Pres. #3: Sample Quarterly Earnings Deck Company’s Q4 2020 Quarterly Earnings Presentation Sent to OSPN on 8/21/20 Published on 2/23/21 62 Source
Slide 63: Legion Recommendation: Product Penetration
Section Legion Recommendation: Product Penetration 3 Product penetration within the customer base can showcase the cross- sell opportunity and its progress Legion Pres. #3: Sample Quarterly Earnings Deck Company’s Q3 2020 Quarterly Earnings Presentation Sent to OSPN on 8/21/20 Published on 11/2/20 6
Slide 64: Legion Recommendation: Customer Penetration
Section Legion Recommendation: Customer Penetration 3 Demonstrating “wallet growth” with a single customer can showcase the significant expansion opportunity, especially after new product launches Legion Pres. #1 Company’s Investor Day Presentation Sent to OSPN on 6/14/18 Published on 12/4/19 64 Sou
Slide 65: Legion Recommendation: TAM
Section Legion Recommendation: TAM 3 Total Addressable Market, or essentially the market size for a company’s solutions, is an important figure as it provides insight on the opportunity size and long-term growth runway Legion Pres. #1 Company’s Investor Presentation Sent to OSPN on 6/14/18 Published
Slide 66: Legion Recommendation: State of Transition
Section Legion Recommendation: State of Transition 3 Given the Company’s financials have been presented in a confusing manner, showcasing the Company’s transition at a high level would be helpful to investors in understanding what “inning” we are in Legion Pres. #2 Company’s Q3 2020 Quarterly Earnin
Slide 67: Legion Recommendation: Customer Base
Section Legion Recommendation: Customer Base 3 OneSpan has an impressive roster of top customers – communicating this to investors helps serve as validation of the technology Legion Slide Company’s Investor Presentation Sent to OSPN on 8/18/18 Published in 9/2018 67 Source: SEC Filings, Company Pres
Slide 68: Legion Recommendation: Guidance Format
Section Legion Recommendation: Guidance Format 3 It is critical to provide guidance on software metrics that actually matter to software-oriented investors, such as ARR, as well as key commentary – this refocus will help combat the negativity associated with Hardware Legion Pres. #3: Sample Quarterl
Slide 69: Sellside Has Reacted Positively to New Disclosures
Section Sellside Has Reacted Positively to New Disclosures 3 Following Legion’s public letters and OSPN’s new disclosures that followed some of Legion’s advice, some sellside analysts have adopted a sum-of-the-parts valuation approach and arrived at $38 to $39 price targets Sidoti upgrades OSPN 1-Ye
Slide 70: Board Lacks Pertinent Capital Markets Experience
Section Board Lacks Pertinent Capital Markets Experience 3 Despite adding new directors to the Board, the Board appears to lack pertinent capital markets experience in overseeing modern software public companies ▪ We believe the Board has failed to effectively communicate the Company’s transitions a
Slide 71: Board Seems to Lack Basic Understanding of Software Metrics
Section Board Seems to Lack Basic Understanding of Software Metrics 3 We believe outdated metrics and confusing consolidated guidance led to a 40% crash in the stock price in a single day ▪ OSPN’s 2020 full year guidance format was based on consolidated Revenue and total Adj. EBITDA o Did not break
Slide 72: Self-Inflicted Disasters: Q2 2019 Earnings Call
Section Self-Inflicted Disasters: Q2 2019 Earnings Call 3 Despite reporting in-line figures and reiterating full year guidance, OSPN shares reacted negatively due to suboptimal messaging on the Q2’2019 earnings call Q1 2019 CEO Commentary Q2 2019 CEO Commentary Implication for Investors “So we will
Slide 73: Self-Inflicted Disasters: Q2 2020 Earnings Call
Section Self-Inflicted Disasters: Q2 2020 Earnings Call 3 OneSpan pulled annual guidance on the Q2 2020 earnings call due to Hardware weakness despite an acceleration in ARR to 29% y/y growth ▪ 2020 full year guidance format in earnings Q2 2020 Earnings Call – Stock Price Reaction release based on c
Slide 74: The Q2 2020 Earnings Call Left Stockholders Infuriated
Section The Q2 2020 Earnings Call Left Stockholders Infuriated 3 The Company also delayed its Q2 2020 10-Q filing – the Board, including Ken Hunt, must have been fully aware but Mr. Hunt still sold stock one day prior to Q2 2020 earnings, further highlighting the Board’s historical lack of controls
Slide 75: Self-Inflicted Disasters: Q3 2020 Earnings Call
Section Self-Inflicted Disasters: Q3 2020 Earnings Call 3 Once again, the Company overly focused investor communications on the impact of Hardware weakness to near-term GAAP financials, causing the stock to crash despite steady recurring revenue Software trends ▪ Given the Company was clearly strugg
Slide 76: Board Appears Unaware of Basic Software Valuation Concepts
Section Board Appears Unaware of Basic Software Valuation Concepts 3 In the Board’s 4/26/21 letter to stockholders, the Company claims that its “investors and sellside analysts can fairly value OneSpan using a sum-of-the-parts approach or other methodologies” ▪ We do not believe the Board understand
Slide 77: Better Financial Clarity Could Avert Need for Strategic Action
Section Better Financial Clarity Could Avert Need for Strategic Action 3 We believe the high-growth and high-margin profile of OneSpan’s Software business remains underappreciated given the lack of profit disclosures, thus contributing to OSPN’s discounted valuation ▪ We believe an SOTP valuation ap
Slide 78: Case Study: PAR Technologies (PAR)
Section Case Study: PAR Technologies (PAR) 3 The majority of sellside analysts covering PAR utilize an SOTP approach to value PAR shares by applying (1) an EV / EBITDA multiple to the non-core government segment’s profits, (2) an EV / Revenue multiple to the legacy software segment, and (3) an EV /
Slide 79: Marc Zenner is Not the Answer
Section Marc Zenner is Not the Answer 3 The Board will tout the addition of Dr. Marc Zenner as a “capital markets expert,” though his expertise seems irrelevant to the issues facing OSPN ▪ Director Marc Zenner was appointed to the Board in June 2019, prior to the major debacles in 2019 and 2020 deta
Slide 80: Table of Contents
Table of Contents 1 Executive Summary 2 TSR Performance and Relative Valuation 3Table of Contents Poor Investor Communications and Financial Disclosures 4 Ineffective Strategic Oversight and Capital Allocation 5 Inadequate Self-Refreshment and Governance Concerns 6 Misaligned Executive Compensation
Slide 81: Ineffective Strategic Oversight
Section Ineffective Strategic Oversight 4 We believe the Board’s lack of critical skill sets, particularly relevant to the go-forward strategy, has led to multiple strategic failures and a structural overhang to OSPN’s valuation ▪ Significant delays in operational undertakings, including the transit
Slide 82: Poor Oversight Has Led to a Significantly Delayed Transition
Section Poor Oversight Has Led to a Significantly Delayed Transition 4 While the actual transition to recurring revenue began in earnest a few years ago, the Company has been attempting this transition for well over a decade but seemingly did not understand what that meant or entailed ▪ Despite the
Slide 83: Transition Appeared to Have Relied on M&A
Section Transition Appeared to Have Relied on M&A 4 The Board has had a strong historical preference for M&A, though we have not witnessed a clear justification for this focus as the Board has failed to prove long- term accretive returns to stockholders ▪ The Company has a robust cash balance, but O
Slide 84: Long-Tenured Directors Have Approved Questionable Acquisitions
Section Long-Tenured Directors Have Approved Questionable Acquisitions 4 OneSpan has made 13 acquisitions as a public company (since 1998) to help diversify the Company beyond Hardware authentication, but multiple acquisitions outright failed On Board When Approved? Recent Non- Hardware John Jean Ma
Slide 85: Able N.V. – Sold to Employee for Peanuts
Section Able N.V. – Sold to Employee for Peanuts 4 The 2006 acquisition of Able was OSPN’s attempt at expanding into the broader enterprise security market by adding a unified threat management (“UTM”) offering ▪ At the time of acquisition, the Board was very Gartner Magic Quadrant excited about the
Slide 86: DigiNotar – A National Crisis and Disaster for OSPN
Section DigiNotar – A National Crisis and Disaster for OSPN 4 Within 10 months of announcing the acquisition, DigiNotar suffered a severe cyberattack that effectively rendered its certificates useless and forced the subsidiary into bankruptcy, resulting in millions in losses ▪ After suffering a majo
Slide 87: Expensive Acquisitions Have Not Improved TSR
Section Expensive Acquisitions Have Not Improved TSR 4 Alfa & Ariss, Silanis and Dealflo represent ~75% of capital spent on M&A over the past 15 years, but the Board has seemingly failed to detail their financial impact or achieve a fair value for these assets in the public markets ▪ The Company’s l
Slide 88: Share Repurchases Only a Recent Phenomena
Section Share Repurchases Only a Recent Phenomena 4 Only until after the Q2 2020 earnings debacle did OSPN heed our years-long recommendation to utilize excess cash towards share repurchases given its persistently low valuation ▪ No share repurchases for 22 years – instead, the Board focused almost
Slide 89: Board Appears Incapable of Sound Capital Allocation
Section Board Appears Incapable of Sound Capital Allocation 4 With no detailed capital allocation policy, an unbalanced approach towards capital deployment, and little disclosures regarding M&A performance, there appears to be little accountability at the Board level ▪ The Company has a history of n
Slide 90: Dilapidated IT Infrastructure Could Not Handle Software Business
Section Dilapidated IT Infrastructure Could Not Handle Software Business 4 Several questionable acquisitions and a lack of post-merger integration seemingly left the Company’s IT infrastructure in a dilapidated state that was unable to process new types of revenue streams (like software) ▪ In fact,
Slide 91: G&A Appears Bloated – A Legacy of Poor Oversight?
Section G&A Appears Bloated – A Legacy of Poor Oversight? 4 OSPN’s G&A expenses appear very high relative to Cybersecurity Peers, and we believe poorly integrated acquisitions and Hardware are causing an overly complicated corporate structure – while OSPN’s CEO has openly discussed the opportunity t
Slide 92: Large Global Footprint Likely Increases Costs
Section Large Global Footprint Likely Increases Costs 4 With 18 locations across 14 countries, OneSpan has a complex international footprint relative to its size, which likely contributes to unnecessarily complex legal and accounting requirements, thereby driving up G&A expense – we believe it is po
Slide 93: Operational Review – Announced Just Months Ago
Section Operational Review – Announced Just Months Ago 4 OSPN recently embarked on an operational review of the Hardware segment, which could partially address the bloated G&A structure – it’s apparent that this process could have commenced years ago under previous management, but the Board seems to
Slide 94: Hardware: In Secular Decline…and Poor Management?
Section Hardware: In Secular Decline…and Poor Management? 4 We believe long-tenured directors have failed to effectively manage the Hardware segment’s long-term performance ▪ The Company believes Hardware token Gartner Magic Quadrant authentication has a $400mm TAM and with User Authentication (Dece
Slide 95: Hardware: From First to Worst
Section Hardware: From First to Worst 4 While Chairman John Fox and Directors Jean Holley and Matthew Moog have watched Hardware decline for years, newer private competitor Yubico has witnessed tremendous success, greatly surpassing OneSpan ▪ Yubico, a hardware token authentication firm founded in 2
Slide 96: Long-Tenured Directors Lack Hardware Technology Expertise
Section Long-Tenured Directors Lack Hardware Technology Expertise 4 While the Board claims its longer-tenured directors have critical hardware-centric experience, we believe Hardware’s “secular decline” is a result of a lack of sufficient hardware technology / cybersecurity experience ▪ In the Board
Slide 97: Our Campaign will Improve, not Harm, Hardware Oversight
Section Our Campaign will Improve, not Harm, Hardware Oversight 4 Whether to oversee its continued operations, or to make a sound strategic judgment on the business, we believe the Board will be better positioned to oversee Hardware if our campaign is successful ▪ CEO and Director Scott Clements has
Slide 98: An 11th Hour “Strategic Review” of Hardware
Section An 11th Hour “Strategic Review” of Hardware 4 On May 10, 2021, the Board discloses that it “explored potential strategic alternatives” of Hardware, raising far more questions than it answers ▪ When did this strategic review occur, and how long did the process take? ▪ Were the Company’s finan
Slide 99: The Board is Misrepresenting Legion’s Plan to Unlock Value
Section The Board is Misrepresenting Legion’s Plan to Unlock Value 4 The Board has characterized Legion’s plan as solely focused on an asset sale of Hardware – as we have stated privately and publicly, there are multiple paths towards achieving full and fair value for stockholders ▪ Improve Financia
Slide 100: Many OneSpan Stakeholders Concur with Legion
Section Many OneSpan Stakeholders Concur with Legion 4 While a refreshed Board may logically conclude to keep the Hardware segment, many key OneSpan stakeholders concur that the legacy segment not only weighs on the Company’s valuation, but can operate and possibly perform better independently with
Slide 101: We Believe our Nominees Will Help Drive Better Accountability
Section We Believe our Nominees Will Help Drive Better Accountability 4 Until key long-tenured and underqualified directors are replaced, we do not believe the Board has the right mix of skillsets to oversee OneSpan’s long-term strategy, operations and capital allocation ▪ In light of CFO Mark Hoyt’
Slide 102: Table of Contents
Table of Contents 1 Executive Summary 2 TSR Performance and Relative Valuation 3Table of Contents Poor Investor Communications and Financial Disclosures 4 Ineffective Strategic Oversight and Capital Allocation 5 Inadequate Self-Refreshment and Governance Concerns 6 Misaligned Executive Compensation
Slide 103: Problematic Board Refreshment Process
Section Problematic Board Refreshment Process 5 The Board has largely dismissed high-quality candidates while reactively adding directors with tangential software experience ▪ High-quality, cloud-first software talent does not seem to be a top priority for the Board ▪ Connections with existing direc
Slide 104: But Don’t Take Our Word For It…
Section But Don’t Take Our Word For It… 5 Below are excerpts from a troubling interview Director Jean Holley, Chair of the Corporate Governance and Nominating Committee, provided to CIO Magazine detailing her experience joining the Board I knew someone who knew someone who knew someone. INTERVIEWER:
Slide 105: Director Recruitment Process Appears to Lack Objectivity
Section Director Recruitment Process Appears to Lack Objectivity 5 Based on past practice and Jean Holley’s interview, we are concerned the Board’s nomination and re-nomination processes are not aligned with obtaining the best Board possible relative to the Company’s needs ▪ Many new director recrui
Slide 106: Biased Practices Reflected in New Additions
Section Biased Practices Reflected in New Additions 5 In conjunction with rejecting Legion’s highly-qualified independent director candidates, the Board has reactively added new directors over the past couple years as a defensive measure, three of which had prior connections to the Board Jean Holley
Slide 107: Overlapping Connections Extend to Executive Team
Section Overlapping Connections Extend to Executive Team 5 Many of the Company’s senior executives worked at companies led and overseen by OneSpan directors Michael Cullinane Director (since 1998, retiring June 2021) Marc Boroditsky Marc Zenner Director (since 2019) Former CFO at SilkRoad Technologi
Slide 108: High Geographic Proximity Amongst Board Members
Section High Geographic Proximity Amongst Board Members 5 Board members are concentrated in the Chicago (OSPN HQ) and Atlanta areas, which appears to reflect a recruitment process focused on local networks – notably, Ms. Holley lived in the Chicago area when she joined the Board and subsequently mov
Slide 109: Questionable Self-Evaluation Process
Section Questionable Self-Evaluation Process 5 ▪ Following the Q2 2020 earnings call debacle, we had communicated to the Board that Founder Ken Hunt should resign immediately, particularly in light of his stock sale one day prior to OSPN stock crashing 40% after the Company announced an earnings mis
Slide 110: Why Did it Take So Long to Remove Michael Cullinane?
Section Why Did it Take So Long to Remove Michael Cullinane? 5 Director Michael Cullinane served as Chair of the Audit Committee for 20 years despite overseeing a “high profile financial mess” while serving as a public company CFO that invited a federal grand jury investigation ▪ Mr. Cullinane notif
Slide 111: John Fox Possesses No Modern Technology Experience
Section John Fox Possesses No Modern Technology Experience 5 Chairman John Fox retired from Deloitte in 2003 and joined the OneSpan Board in 2005 – he has gained the bulk of his technology “experience” prior to the proliferation of the Internet and cloud computing A History of 2005-2006 John Fox app
Slide 112: Moog’s Private SaaS Experience Lacks Relevance to OSPN
Section Moog’s Private SaaS Experience Lacks Relevance to OSPN 5 We do not believe Mr. Moog’s experience as CEO of PowerReviews, a private SaaS company focused on online reviews, is pertinent to OSPN given its small scale (~$25mm revenues), product / industry focus and questionable culture “The keg?
Slide 113: Matthew Moog Lacks Scaled, Public Tech Experience
Section Matthew Moog Lacks Scaled, Public Tech Experience 5 Director Matthew Moog has held a variety of senior positions at small and/or private companies and non-profits in the consumer internet and radio sectors ▪ Mr. Moog’s only public company experience (aside from serving on OSPN’s Board) was s
Slide 114: Marc Zenner’s Background Appears Irrelevant
Section Marc Zenner’s Background Appears Irrelevant 5 Director Marc Zenner is a career investment banker and served on two public company boards with little relevance to OSPN and poor results ▪ While Dr. Zenner has a long career as a generalist investment banker advising companies across many sector
Slide 115: Improve Board Governance for Sustainably Better Results
Section Improve Board Governance for Sustainably Better Results 5 As a 14-year veteran of the Board, and Chair of the Corporate Governance and Nominating Committee for 8 years, we believe Jean Holley has been a large part of the reason the Board has failed to evolve with the Company’s strategy, indi
Slide 116: Jean Holley’s Tumultuous Career
Section Jean Holley’s Tumultuous Career 5 It appears that Director Jean Holley “resigned” or was terminated from three of her last four full-time positions, and the fourth company went bankrupt while she was part of the executive management team – none of these roles provided her with direct experie
Slide 117: Poor Engagement with Stockholders
Section Poor Engagement with Stockholders 5 The Board does not appear to have an interest in communicating with stockholders, let alone soliciting feedback ▪ Although we have held 40+ calls and meetings with the Company, almost all were with management – our only in-person interaction with the Board
Slide 118: Legion’s Engagement on Board Refreshment
Section Legion’s Engagement on Board Refreshment 5 2018 2019 Board interviews Legion meets with Legion meets with John Fox Legion offers Legion candidates, CEO, expresses Chairman at OSPN appointed Board to collaborate including Nominee interest in further Investor Day, offers Legion Chairman appoin
Slide 119: Board Rebuffed Legion’s Multiple Attempts to Engage Constructively
Section Board Rebuffed Legion’s Multiple Attempts to Engage Constructively 5 Consistently, the Board has rejected meaningful change not on their terms, including four settlement proposals and an offer to collaborate on a joint effort to identify director candidates Timeframe Legion’s Engagement / Se
Slide 120: OneSpan Must Improve its ESG Disclosures
Section OneSpan Must Improve its ESG Disclosures 5 We believe a substantively refreshed Board can begin improving the Board’s overall governance practices, start Sustainability Accounting Standards Board (“SASB”) and Global Reporting Initiative (“GRI”) reporting, and establish a materiality matrix t
Slide 121: Table of Contents
Table of Contents 1 Executive Summary 2 TSR Performance and Relative Valuation 3Table of Contents Poor Investor Communications and Financial Disclosures 4 Ineffective Strategic Oversight and Capital Allocation 5 Inadequate Self-Refreshment and Governance Concerns 6 Misaligned Executive Compensation
Slide 122: OneSpan’s Outdated Executive Compensation Programs
Section OneSpan’s Outdated Executive Compensation Programs 6 OneSpan’s executive compensation programs have historically failed to reflect the transition to Software recurring revenue, and instead appear to perversely incentivize legacy solutions ▪ Annual and long-term compensation programs were eff
Slide 123: GAAP Revenue Recognition – Illustrative Examples
Section GAAP Revenue Recognition – Illustrative Examples 6 Legacy Hardware and perpetual licensing have an outsized immediate impact on GAAP revenue and profits given upfront recognition vs. ratably with SaaS Hardware Example Perpetual License Example SaaS Example $200 $200 $200 $180 $180 $180 Cumul
Slide 124: Summary of Annual Executive Compensation Program
Section Summary of Annual Executive Compensation Program 6 Considering Hardware and perpetual licensing drive near-term GAAP Revenue and EBITDA, legacy solutions appear heavily incentivized over recurring software revenue for several years despite Software reaching 50% of total revenue by 2018 Legio
Slide 125: Summary of Long-Term Executive Compensation Program
Section Summary of Long-Term Executive Compensation Program 6 OneSpan’s long-term executive compensation program contains many duplicative measures (within the program and vs. annual program), lack performance metrics specific to recurring software revenue, and for years lacked TSR, ROIC and profita
Slide 126: Compensation Programs Appear to Drive Perverse Incentives
Section Compensation Programs Appear to Drive Perverse Incentives 6 Due to the differing revenue recognition schedules between legacy Hardware and perpetual licensing vs. recurring revenue, antiquated performance metrics can fail to incentivize OneSpan’s valuable transition ▪ Hardware and perpetual
Slide 127: Pay for “Performance”?
Section Pay for “Performance”? 6 Results from the 2018-2020 long-term incentive plan show Hardware greatly surpassed the “target” level, while Software barely met the lower “threshold” level yet is the key driver for long-term value creation Given the significant outperformance of Hardware, manageme
Slide 128: Our Recommendations on OSPN Executive Compensation
Section Our Recommendations on OSPN Executive Compensation 6 Management should be incentivized to drive efficient Software recurring revenue growth as this is the key driver for long-term value ▪ Focus should be on efficient growth, not “growth at all costs” ▪ Utilize software-oriented recurring rev
Slide 129: Board’s Failed Say-on-Pay Frequency Proposal
Section Board’s Failed Say-on-Pay Frequency Proposal 6 Why did the Board expedite a say-on-pay frequency vote and recommend 3 years? Was it to lock in a 3-year frequency given Ken Hunt’s dwindling ownership? Voting Results – Say-on-Pay Frequency 100% 3% 90% 19% Other Other 80% stockholders stockhold
Slide 130: John Fox: Chair of Compensation Committee for 15 Years
Section John Fox: Chair of Compensation Committee for 15 Years 6 We believe Mr. Fox should be held principally responsible for overseeing an executive compensation program that is not properly aligned with value creation ▪ We believe an effective and appropriate executive compensation program requir
Slide 131: Table of Contents
Table of Contents 1 Executive Summary 2 TSR Performance and Relative Valuation 3Table of Contents Poor Investor Communications and Financial Disclosures 4 Ineffective Strategic Oversight and Capital Allocation 5 Inadequate Self-Refreshment and Governance Concerns 6 Misaligned Executive Compensation
Slide 132: Legion Partners’ Nominee: Sarika Garg
Section Legion Partners’ Nominee: Sarika Garg 7 We believe Ms. Garg will bring significant software operational, sales, technology and M&A leadership experience to the Board ▪ Career History o Chief Strategy Officer, Tradeshift (2018-2020) o Various Senior Roles, Tradeshift (2005-2018) o Office of t
Slide 133: The Board Needs True Cloud-First Operations Experience
Section The Board Needs True Cloud-First Operations Experience 7 ▪ Ms. Garg – why are you excited to potentially join OneSpan’s Board? o “The company is in a really exciting space and the market opportunity for OneSpan is vast. While the Company has a roster of leading clients, I believe the Company
Slide 134: Legion Partners’ Nominee: Rinki Sethi
Section Legion Partners’ Nominee: Rinki Sethi 7 We believe Ms. Sethi will bring significant cybersecurity software & hardware and technical M&A leadership experience to the Board ▪ Career History o Chief Information Security Officer, Twitter (2020–Present) o Chief Information Security Officer, Rubri
Slide 135: The Board Needs Technical Cybersecurity Expertise
Section The Board Needs Technical Cybersecurity Expertise 7 ▪ Ms. Sethi – why are you excited to potentially join OneSpan’s Board? o “Reputation matters in this industry and it’s paramount for a cybersecurity firm’s long-term success. I’m excited to help elevate OneSpan’s profile within the industry
Slide 136: Legion Partners’ Nominee: Michael McConnell
Section Legion Partners’ Nominee: Michael McConnell 7 We believe Mr. McConnell will bring extensive executive, operational, board, governance and investment experience, particularly in the technology & software space, to the Board ▪ Career History o Independent Director, Vonage (Ticker: VG) (2019-Pr
Slide 137: The Board Needs to Focus on Value Creation
Section The Board Needs to Focus on Value Creation 7 ▪ Mr. McConnell – why are you excited to potentially join OneSpan’s Board? o “With its blue-chip customer base, the intrinsic value of OneSpan is significant and I’ve been a stockholder for some time. However, the Board exhibits many of the charac
Slide 138: Legion Partners’ Nominee: Sagar Gupta
Section Legion Partners’ Nominee: Sagar Gupta 7 Legion Partners is the second-largest institutional investor in OneSpan – we believe our firm and Mr. Gupta are well-aligned with the broader stockholder base which deserves true, independent ownership representation on the Board ▪ Career History o Sen
Slide 139: The Board Needs Stockholder Representation
Section The Board Needs Stockholder Representation 7 ▪ Mr. Gupta – why are you excited to potentially join OneSpan’s Board? o “We’ve been involved with OneSpan for over three years and I’ve developed a great rapport with the management team. While it’s been exciting to witness the progress, there is
Slide 140: Pro Forma Board Composition Impact
Section Pro Forma Board Composition Impact 7 We believe it is in the Board’s social and economic interests to genuinely embrace a culture of diversity & inclusion Pro Forma Composition Current Composition (Assuming Legion Nominees Elected) 2/9 Female 3/9 Female Female 1/9 Racial/Ethnic 4/9 Racial/Et
Slide 141: Pace of Refreshment Has Been Inconsistent
Section Pace of Refreshment Has Been Inconsistent 7 The Board’s low average tenure is due to a flurry of recent, defensive additions following Legion’s involvement, which namely resulted in a net increase to the Board’s size as long-tenured directors rarely departed Naureen Hassan and Legion Mariann
Slide 142: Overall Board Generally Lacks Pertinent Experience
Section Overall Board Generally Lacks Pertinent Experience 7 Modern software experience at a cloud-first company is rare amongst all of OneSpan’s independent directors Modern Software Experience Other Public Incumbent Director, Age Tenure Industry Hardware C-Level Public Board / Position (Years) Bac
Slide 143: Incumbents’ Public Company Board Experience
Section Incumbents’ Public Company Board Experience 7 For most OSPN directors, OneSpan is their first and only public company board – prior public board experience has not been a prerequisite Jean Matthew Marc Marc Marianne Garry Scott OSPN Director John Fox Holley Moog¹ Zenner Boroditsky Johnson Al
Slide 144: Incumbent Directors’ Other Boards Appear Irrelevant
Section Incumbent Directors’ Other Boards Appear Irrelevant 7 Tenure at Other OSPN Director Other Public Board Public Board Comments • Professional services firm that handles business process outsourcing for enterprise clients • We do not view Cognizant, or professional services John Fox firms in ge
Slide 145: Nominee Michael McConnell has Pertinent Board Experience
Section Nominee Michael McConnell has Pertinent Board Experience 7 Mr. McConnell has served on 16 public company boards, including many cloud- based SaaS, on-premise software, and hardware companies, including within the cybersecurity space Software and Hardware Position and Key Changes During Publi
Slide 146: Case Study: SPS Commerce (SPSC), a SaaS Company
Section Case Study: SPS Commerce (SPSC), a SaaS Company 7 Legion Partners previously invested in SPSC and pursuant to a cooperation agreement, Mr. McConnell was appointed to the SPSC board SPSC Stock Price Chart $120.00 $100.00 Mr. McConnell’s board tenure concludes $80.00 Michael McConnell Legion a
Slide 147: The Time Has Come to #ProtectOneSpan
Section The Time Has Come to #ProtectOneSpan 7 We urge fellow stockholders to vote the WHITE proxy card to elect strong and proven technology leaders to the Board ▪ Our nominees will seek to apply a holistic approach to fixing OSPN’s valuation: ✓ Improve financial disclosures, including separating S
Slide 148: Table of Contents
Table of Contents 1 Executive Summary 2 TSR Performance and Relative Valuation 3Table of Contents Poor Investor Communications and Financial Disclosures 4 Ineffective Strategic Oversight and Capital Allocation 5 Inadequate Self-Refreshment and Governance Concerns 6 Misaligned Executive Compensation
Slide 149: Proxy Solicitor Information
Section Proxy Solicitor Information 8 Please vote your WHITE proxy card today If you have any questions, require assistance in voting your WHITE proxy card, or need additional copies of Legion’s proxy materials, please contact: Saratoga Proxy Consulting, LLC 520 8th Avenue, 14th Floor New York, NY 1
Slide 150: Legion Partners Public Correspondence and Contact Information
Section Legion Partners Public Correspondence and Contact Information 8 All correspondence available at www.protectonespan.com ▪ Letter to the Board of Directors August 18, 2020 ▪ Letter to OneSpan Stockholders February 25, 2021 ▪ Definitive Proxy Statement April 14, 2021 ▪ Letter to OneSpan Stockho
Slide 151: Software Multiples Have Risen Over the Past 3 Years
Section Software Multiples Have Risen Over the Past 3 Years 8 Since we first invested in OSPN (April 2018) and filed a Schedule 13D (November 2018) which contained our original valuation analysis, multiples in the software space have risen tremendously BVP NASDAQ Emerging Cloud Index Forward EV / Re
Slide 152: Historical Review of Executive Compensation Programs
Section Historical Review of Executive Compensation Programs 8 Fiscal Annual Incentive Composition Long-Term Incentive Composition Legion Commentary Year • Performance-based equity awards • Total revenue inclusive of non-hardware revenue, making • Annual cash bonus,100% (60%): the two performance me
Slide 153: Disclaimer – Important Information
Disclaimer – Important Information The materials contained herein (the “Materials”) represent the opinions of Legion Partners Holdings, LLC and its affiliates (collectively, “Legion Partners”, “Legion” or “we”) and are based on publicly available information with respect to OneSpan Inc. (the “Compan
Slide 154: Legion Partners
U; LEGION PARTNERS