Unassociated Document
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
NOTICE
OF EXEMPT SOLICITATION
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1.
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Name
of the Registrant:
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MINDSPEED
TECHNOLOGIES, INC. |
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2.
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Name
of person relying on exemption:
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AIGH
INVESTMENT PARTNERS, LLC |
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3.
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Address
of person relying on exemption:
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6006
Berkeley Avenue, Baltimore, MD 21209 |
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4.
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Written
materials. Attach written materials required to be submitted
pursuant to Rule 14a-6(g)(1)
[§240.14a-6(g)(1)]
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We are
writing to urge you to VOTE AGAINST three important shareholder resolutions that
appear on Mindspeed's proxy card for the March 10 Annual Meeting:
WE
URGE YOU TO VOTE:
AGAINST
PROPOSAL 3 (INCREASE OF LONG-TERM INCENTIVE SHARES),
AGAINST
PROPOSAL 4 (INCREASE OF DIRECTORS STOCK PLAN), AND
AGAINST
PROPOSAL 5 (STOCK OPTION EXCHANGE PROGRAM).
Mindspeed's
stock price has declined 75% over the most recent six months, far more than the
stock prices of comparable companies, which we believe was due to mismanagement
by the current Board and officers. In addition, despite poor
performance, the Board increased senior executive and director compensation and
has requested you to vote in favor of excessive equity compensation packages in
Proposals 3, 4 and 5.
WE ALSO URGE YOU TO WITHHOLD YOUR
VOTE (PROPOSAL 1)
for the election of two directors.
AIGH
Investment Partners owns 1,200,000 shares of MSPD, constituting approximately 5%
of the outstanding shares.
Here are
our reasons why we are asking you to vote against these Proposals:
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1.
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Poor
management performance
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2.
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Excessive
management compensation
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3.
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Poor
stock performance relative to peers
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Management has mismanaged Mindspeed’s
business: (a) inventories have increased dramatically at a time when many
companies have lowered inventories in light of expected slower purchases and to
generate cash; (b) specialized semiconductor companies including PMCS, AMCC and
all other companies mentioned as peers in MSPD’s most recent proxy, as well as
PSEM, ISIL and others, have made major expense reductions to achieve near
breakeven, breakeven or positive operating income even at lower sales levels;
and (c) during the two best quarters during the last year, MSPD did not achieve
an operating income level from operations near the best of its peers, despite
its 65%+ gross margins, due to
a bloated management cost structure.
Mindspeed's stock has declined more
than 75% over the last six months, significantly more than Mindspeed's
peers (only CNXT has performed worse). We believe this disproportionate decline
is due to poor management and excessive compensation.
Most
other semiconductor companies are trying to build value for their shareholders
in every way possible – in addition to cost cutting and stock buybacks, many are
even reducing executive pay. Notwithstanding weak operating
performance, according to the Mindspeed proxy the Board of Mindspeed has
approved a special additional
bonus in 2009 of $600,000 for the CEO, who received over $1 million in
compensation in 2008, which we believe is substantially more than
executives of comparable companies receive. This is in addition to a $3 million
golden parachute for the CEO and other large payments to other executives if
there is a change of control. The company already has a poison pill and a
staggered Board, which make a takeover very difficult (without the additional
golden parachute payments) and entrenches management, regardless of performance.
If management is truly doing a good job for the shareholders, why does the
company need expensive golden parachutes, just another management entrenching
device?
After all
that shareholders have suffered, we are horrified by the Board's desire to
re-price stock options as well as ask for a large new options pool, for
directors as well as for executives, of millions of more shares at today’s fire
sale price. These actions will further dilute shareholder value. We trust that
shareholders big and small alike will act to stop what we consider to be a major
damage to shareholder value. We strongly urge shareholders to stick up for their
rights and vote a strong NO for Proposals 3, 4 and 5 on the
proxy.
We
strongly urge shareholders to WITHHOLD YOUR VOTE on Proposal 1, election of two
directors. Due to plurality voting, there is no way to vote down the
two members that are up for re-election, but shareholders can make their views
known. We believe that the two directors up for re-election would NOT be
re-elected by shareholders if shareholders had another choice on the proxy, and
we view this as being unfair.
In view of the poor recent
performance and management’s aggressive pursuit of increased compensation, we
strongly believe that the Board should put the company up for sale
immediately before there is further dilution or further erosion in the
stock price. We believe that this is the only solution that is fair and
equitable to shareholders who have suffered so much, so that we can finally see
some return of value. We believe that MSPD is worth considerably more than its
current stock price to a strategic acquirer, and current shareholders should not
suffer dilution to give an unearned windfall gain to the current management when
such a sale occurs. We would consider failure by management to explore a
potential sale of the company or failure to consider any bids for the company to
be a material and serious breach of fiduciary responsibility to all shareholders
both large and small alike and we would take appropriate action.
We
strongly urge all shareholders to join us in our cause and please feel free to
contact us at any time.
Orin
Hirschman
Manager
AIGH
Investment Partners, LLC
(410)
415-6464
orin@adamsmithco.com