NEW YORK – Rubric Capital Management LP, an investment advisor with ownership of approximately 9.0% of Xperi (NASDAQ:) Inc. (NYSE: XPER), has publicly challenged the company’s board over issues of stock performance and dilution. Rubric’s analysis claims that Xperi, along with its predecessor company, has significantly underperformed in comparison to the Russell 3000 index, according to data calculated as of April 26, 2024.
Rubric criticizes Xperi for presenting an allegedly misleading picture of its stock performance, accusing the company of omitting a full quarter of trading data in its investor materials. Moreover, Rubric contends that Xperi’s board has failed to take responsibility for the company’s poor performance prior to the spin-off of Adeia Inc. (Nasdaq: ADEA) in October 2022, and that this trend has continued post-spin-off.
The investment advisor also takes issue with Xperi’s approach to stock-based compensation. Rubric argues that despite a 60% reduction in share count since 2021, Xperi’s stock-based compensation has increased on an absolute basis, resulting in what Rubric describes as a “rest and vest” culture that benefits insiders at the expense of stockholders. The analysis points out that almost 80% of the restricted stock unit (RSU) grants are tied to time, not performance.
In response to these concerns, Rubric is advocating for the election of its own director nominees, Thomas A. Lacey and Deborah S. Conrad, to Xperi’s board. Rubric believes that new representation is necessary to align the interests of stockholders and insiders and to foster a culture of accountability and performance at Xperi.
This proxy contest arises from a divergence in the paths of stockholders, who have faced investment losses and disappointments in margins and growth, and insiders, who Rubric suggests have been unjustly enriched. The investment advisor urges stockholders to vote for its nominees on the WHITE proxy card.
The information in this article is based on a press release statement from Rubric Capital Management LP.
InvestingPro Insights
As Xperi Inc. (NYSE: XPER) faces scrutiny from its shareholders, particularly Rubric Capital Management, it’s crucial to consider the company’s financial health and market performance. With a market capitalization of $479.57 million, Xperi holds a unique position in the tech sector. Notably, the company’s gross profit margin stands at an impressive 77.25% for the last twelve months as of Q4 2023, suggesting strong efficiency in its operations despite the concerns raised by Rubric regarding stock performance and compensation issues.
InvestingPro Tips indicate that Xperi holds more cash than debt on its balance sheet, a sign of financial stability that could be a critical factor in addressing shareholder concerns about the company’s direction. Moreover, analysts predict that Xperi will be profitable this year, which could potentially mark a turnaround from its non-profitable status over the last twelve months.
However, it’s important to note that two analysts have revised their earnings downwards for the upcoming period, which may signal caution for investors. With the next earnings date scheduled for May 8, 2024, stakeholders will be watching closely to see if these predictions hold true and how the company plans to address the issues raised by Rubric.
For those considering a deeper dive into Xperi’s financials and stock performance, InvestingPro offers additional insights and metrics. By using the coupon code PRONEWS24, investors can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking access to a total of 6 additional InvestingPro Tips that could further inform investment decisions regarding Xperi.
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