Immersion Continues to Reject Company's Extensive Efforts to Settle
No Shareholder Action Required at This Time
Turtle Beach Corporation (NASDAQ:IMMR, ", Immersion", ))))):
In the interest of avoiding another costly and distracting proxy contest, members of the Turtle Beach Board and management team have engaged extensively and in good faith with Immersion, including offering three separate counterproposals that were ultimately rejected. Immersion's submission of a nomination notice, including a third nominee, Sean Madnani, on April 7, 2023, demonstrates its commitment to wasting shareholder capital on yet another proxy contest less than a year after the Board was substantially refreshed with five new directors.
Most recently, Immersion rejected the Company's offer to accept two of its nominees to the Board, have two incumbent directors resign, and the option to form a Value Enhancement Committee (with the two Immersion directors as members), all of which were key demands from Immersion.
Immersion's lack of good faith in engaging in talks has been evident since engagement began. On March 26, 2023, the Company's advisors received a verbal proposal from Immersion that demanded, among other things, reducing the Board's size to six directors, and immediately appointing Messrs. Eric Singer, Immersion's President, CEO and Chairman and Bill Martin, a member of the Immersion Board of Directors, to the Turtle Beach Board. Immersion's proposal would have resulted in a 7% shareholder gaining control of 33% of the Board. Furthermore, with Messrs. Singer and Martin both serving on Immersion's Board, the proposal would also have resulted in 50% of Immersion's named executive officers and 40% of its Board sitting on Turtle Beach's Board, which could create potential conflicts from divided obligations and duties to Immersion and Turtle Beach's shareholders. Immersion's proposal also required that Turtle Beach form a Board committee to review strategic alternatives despite the Company having recently completed an extensive strategic alternatives process.
In an effort to understand if Immersion's plans would be in the best interest of Turtle Beach shareholders, the Company met with Immersion on April 1, 2023, during which meeting Immersion failed to describe how its nominees or plans would add value for shareholders. Despite the lack of any substantive information from Immersion, in the interest of avoiding another costly and distracting proxy contest, Turtle Beach subsequently delivered three rounds of counterproposals to Immersion.
Most recently, on April 11, 2023, the Company delivered a third counterproposal to Immersion's counsel, which accepted the key elements being sought by Immersion, including:
- The appointment of two of Immersion's nominees as new independent directors selected by the Board, subject to the typical due diligence process run by the Board's Nominating and Governance Committee;
- The resignation of William Keitel, the Company's Lead Independent Director, who has volunteered to retire, and a second incumbent director of the Board's choosing; and
- The formation of a Value Enhancement Committee, upon the agreement of only four directors from the reconstituted Board, for the purpose of overseeing value creation opportunities to enhance or otherwise maximize value for shareholders.
Immersion has insisted on receiving reimbursement for their expenses, which the Company does not believe is reasonable, given the desire not to waste or transfer shareholder capital from the Company's shareholders to Immersion's shareholders.
Despite the Company's extensive efforts to engage with Immersion and find a mutually agreeable solution, Immersion appears to prefer waging a costly and distracting proxy contest at the expense of both Turtle Beach shareholders and Immersion shareholders. The Turtle Beach Board and management team are steadfast in our commitment to serving the best interests of all Turtle Beach shareholders, which is why we have been focused on constructively engaging with Immersion from the outset.
The Board stands ready and willing to continue to engage with Immersion to move beyond this matter and return its full attention to overseeing the Company's operations and creating value for shareholders. The Board is committed to serving the best interests of all Turtle Beach shareholders as it works to reach a mutually agreeable resolution with Immersion.
