Starboard Group Delivers Letter to ISSI CEO and Board Of Directors

NEW YORK, Dec. 1, 2014 /PRNewswire/ -- Starboard Value LP (together with its affiliates, director nominees, and Oliver Press Partners, LLC, the "Starboard Group"), the second largest shareholder of Integrated Silicon Solution, Inc. (NasdaqGS: ISSI) ("ISSI" or the "Company") with ownership of approximately 8.0% of the Company's outstanding common stock, today announced that the Starboard Group has delivered a letter to Scott Howarth, ISSI's President and Chief Executive Officer, and ISSI's Board of Directors (the "Board").

The Starboard Group also announced today that Starboard submitted a letter to the Company on November 28, 2014 nominating five candidates with strong, relevant backgrounds for election to the Board of Directors at the Company's 2015 Annual Meeting.  Each director candidate's biography is included below.  The Starboard Group looks forward to continuing its constructive dialogue with the Board and management regarding ISSI's business, Board composition, and opportunities to create value for shareholders. 

The full text of today's letter follows:

December 1, 2014

Integrated Silicon Solution, Inc.
1623 Buckeye Drive
Milpitas, CA 95035
Attn: Scott Howarth, President and Chief Executive Officer

cc: Board of Directors

Dear Scott,

Starboard Value LP, together with its affiliates ("Starboard"), and Oliver Press Partners, LLC ("OPP"), currently own approximately 8.0% of the outstanding common stock of Integrated Silicon Solution, Inc. ("ISSI" or the "Company"), making us the Company's second largest shareholder.  Under separate cover, we have delivered a formal notice of our nomination of a slate of exceptionally qualified director candidates for election to the Board of Directors of ISSI (the "Board") at the 2015 Annual Meeting. 

We appreciate the time that you and John Cobb have spent with us at your headquarters in Milpitas and at Starboard's offices in New York, and we hope to continue our constructive dialogue regarding the Company's business and opportunities to create value for shareholders.  We believe that ISSI is meaningfully undervalued and that substantial opportunities exist within the control of management and the Board to create value for all shareholders.  However, in order realize this potential, we believe that the Board needs to be reconstituted with directors that have the experience, the independence, and the shareholder-oriented mindset to oversee and implement the changes necessary to drive substantial value.

ISSI has carved out a strong niche selling specialty memory products – DRAM and SRAM – to the auto and industrial markets.  This highly attractive business, which now comprises approximately 75% of ISSI's revenue, is a growing, sustainable, and profitable business, given long design and product cycles and ISSI's inherent advantages in supplying products ideally suited for these markets.  Despite this strong business, which has grown from approximately $44 million to $230 million over the past five fiscal years, a compound annual growth rate in excess of 100%, ISSI currently trades at a substantial discount to peers, and is in fact one of the cheapest companies in the semiconductor space on multiple valuation parameters. 

We believe this discount is due in part to the distraction from a number of non-core acquisition initiatives, including two recently-acquired businesses that ISSI does not appear to be gaining traction in, Analog and NOR Flash.  As we have discussed with you, we believe that management's focus and shareholders' capital would be better spent on ISSI's profitable and growing core business.  Moreover, given the Company's mixed track record of acquiring businesses and the sizable discount at which the Company currently trades, we do not believe that further acquisitions would be a prudent use of ISSI's substantial cash balance at this time.

We believe that the fresh perspective brought by new, highly qualified directors will be critical in evaluating the future of ISSI's non-core businesses.  ISSI's current Board structure is highly unusual and not in line with best practices, with three of the Company's executive officers on the Board, including two of the Company's founders as Executive Chairman and Vice Chairman.  In fact, Institutional Shareholder Services, a leading corporate governance and proxy advisory firm, gives ISSI a QuickScore of 9 in its "Board" category, indicating an extremely high level of concern, while flagging "Board Composition" as an issue.  Glass Lewis, another leading corporate governance and proxy advisory firm, has recommended WITHHOLD votes for certain directors in each of the past four years, also citing concerns regarding board composition.  Moreover, the Board's Vice Chairman is also an Executive Vice President of the Company, reporting to the CEO, which creates confusing reporting lines and potential conflicts of interest, since the CEO must report to the Board.  In addition, despite their long-tenure and a generous set of equity incentive plans, members of the Board have divested themselves of stock at such a rate that the nine current directors now collectively own less than 400,000 shares, or approximately 1% of the Company's common stock.¹

As we hope you can easily recognize upon review of our nominees' qualifications, we have assembled a slate of candidates with outstanding and deeply relevant backgrounds for ISSI who can add tremendous value to the Company.  Our nominees include individuals who have held senior operating and board roles within highly successful semiconductor and technology companies, and have direct knowledge of the businesses in which ISSI competes, as well as shareholder representatives who can provide the meaningful ownership perspective that does not appear to be present on the Board as currently constituted.   

We look forward to working constructively with you in order to reconstitute the Board with the most qualified directors for the benefit of all shareholders.  We take our investment in the Company, and the Board's stewardship of shareholders' capital, very seriously.  As one of the largest shareholders of ISSI, we intend to maintain an open dialogue in working with you to ensure that value is created for all shareholders. We hope that you will take advantage of this opportunity to engage constructively with us to address the concerns that we and others have expressed.

The Starboard Group's Highly Qualified Nominees:

Peter A. Feld has served as a member of Starboard Principal Co GP LLC and a member of the Management Committees of Starboard Value GP and Starboard Principal Co GP LLC since April 2011. From November 2008 to April 2011, Mr. Feld served as a Managing Director of Ramius LLC and a Portfolio Manager of Ramius Value and Opportunity Master Fund Ltd. From February 2007 to November 2008, Mr. Feld served as a Director at Ramius LLC. Mr. Feld joined Ramius LLC as an Associate in February 2005. From June 2001 to June 2004, Mr. Feld was an investment banking analyst at Banc of America Securities, LLC. Since October 2014, Mr. Feld has served as a member of the board of directors of Darden Restaurants, Inc., a full service restaurant company. Mr. Feld has also served as a member of the board of directors of Tessera Technologies, Inc., which develops, invests in, licenses and delivers innovative miniaturization technologies and products for next-generation electronic devices, since June 2013. Mr. Feld previously served as a member of the board of directors of Unwired Planet, Inc. (f/k/a Openwave Systems Inc.), a public company with a portfolio of patents many of which are considered foundational to mobile communications, and span smart devices, cloud technologies and unified messaging, from July 2011 to March 2014 and served as its Chairman from September 2011 to July 2013. Mr. Feld also previously served on the board of directors of Integrated Device Technology, Inc., a company which designs, develops, manufactures and markets a range of semiconductor solutions for the advanced communications, computing and consumer industries, from June 2012 until February 2014. In addition, Mr. Feld served on the boards of directors of SeaChange International, Inc., a leading global multi-screen video software company, from December 2010 to January 2013 and CPI Corp. from July 2008 to July 2009. Mr. Feld received a BA in economics from Tufts University.

Manoj Gujral recently served as the Vice President and General Manager of the Broadband and Consumer Division of Cavium, Inc., a high growth company providing integrated processors for networking, storage, video, and security applications, from April 2010 to June 2012, where he was responsible for Business Strategy, Engineering Execution, Marketing and P&L functions with a focus on Connected Home and Office segments. Mr. Gujral also served on the board of directors of Virage Logic ("Virage"), a then publicly traded leading provider of application optimized intellectual property (IP) platforms, from May 2010 until Virage was acquired by Synopsys, Inc. in September 2010. From 2005 until April 2010, Mr. Gujral served as the General Manager of Platform Business of NVIDIA Corporation ("NVIDIA"), which provides platform solutions for Compute, Workstation, Visualization and Mobile markets. From 2003 to 2005, Mr. Gujral served as Managing Director of the Specialty Interconnect Business Unit at Cypress Semiconductor Corporation ("Cypress"), which delivers high-performance, mixed-signal, programmable solutions that provide customers with rapid time-to-market and exceptional system value, where he was responsible for system interconnect products for wireless and handset markets. Prior to Cypress, Mr. Gujral worked in various management roles at Raza Foundries, Inc., ShareWave, Inc. and Unisys, including Vice President and Director of Engineering, respectively. Mr. Gujral received his MSEE from Oregon State University, MBA from San Jose State University and completed the Executive Leadership Program at Stanford University Graduate School of Business.

Cathal Phelan currently serves as Chief Executive Officer of a California headquartered start-up company, a position he has held since November 2014. Mr. Phelan also founded his own consulting firm Atticotti LLC ("Atticotti") in April 2013, focusing on business strategies, IP management and systems/semiconductor design. For the year prior to founding Atticotti, he served as the Executive Vice President ("EVP") of the Consumer and Computation Division of Cypress Semiconductor Corporation "Cypress"), a Silicon Valley-based semiconductor design and manufacturing company. In multiple stints with Cypress dating back to 1991, Mr. Phelan held the positions of Chief Technical Officer, EVP of the Data communications Division, EVP of the Personal Communications Division, Sr. Design & Architecture Director, Design Manager and Memory Designer. From May 2006 to September 2008, Mr. Phelan was away from Cypress and served as the Chief Executive Officer and President of Ubicom, Inc., a venture capital backed startup focused on building a unique media and communications processor for transporting digital content over the home network. Mr. Phelan worked for six years at the Philips Research Laboratories in Eindhoven, The Netherlands as a VLSI designer and Member of Technical staff. Mr. Phelan served as a Director of Virage Logic Corporation from March 2006 until it was acquired by Synopsys, Inc. in 2010. He also serves as a Director at Touchstone Semiconductor, Inc. Mr. Phelan holds 38 U.S. patents. Mr. Phelan graduated from the Engineering School of Trinity College at the University of Dublin in Ireland, where he received a Bachelor's degree in Micro-Electronic Engineering and Mathematics in 1984 and subsequently a Masters degree in Micro-Electronic Engineering in 1985.

Clifford Press has been a Managing Member of Oliver Press Partners, LLC, an investment advisory firm and Oliver Press Investors, LLC since March 2005. From 1986 to March 2003, Mr. Press served as a General Partner of Hyde Park Holdings, Inc., a private equity investment firm ("HPH"). From March 2008 to November 2009, Mr. Press served as a director and member of the Governance & Nominating Committee of Coherent Inc., a manufacturer of laser based photonic products. From December 2011 to February 2013, Mr. Press served as a director and member of the Compensation Committee of SeaBright Holdings, Inc., a holding company whose wholly-owned subsidiary, SeaBright Insurance Company, operates as a specialty provider of multi-jurisdictional workers' compensation insurance. Mr. Press received his MA degree from Oxford University and an MBA degree from Harvard Business School.

Edward Terino is the President of GET Advisory Service LLC, a strategic and financial management consulting firm focused on the technology and maritime industries, a position he has held since March 2009. Mr. Terino is the founder of Novium Learning, Inc., a start-up, privately-held, post-secondary vocational education publishing company, which he founded in January 2011. Mr. Terino currently serves on the Board of Directors of Baltic Trading Ltd., an international dry bulk shipping company, a position he has held since March 2010, where he is Chairman of the Audit Committee and a member of the Compensation Committee. Since July 2010, Mr. Terino has served as a director of SeaChange International Inc., a digital video software company, where he is Chairman of the Audit Committee and a member of the Compensation Committee. From October 2012 through November 2013, Mr. Terino served as a director of Extreme Networks, Inc., a network switching and services company, where he was a member of the Audit Committee. Prior to that, Mr. Terino served as a director of S1 Corporation, an internet banking and payments software company, from April 2007 until February 2012, when S1 Corporation was acquired by ACI Worldwide Inc. While at S1 Corporation, Mr. Terino served as Chairman of the Audit Committee and a member of the Compensation Committee. Mr. Terino also served as a director of Phoenix Technologies Ltd., a BIOS software company, where he was Chairman of the Audit Committee and a member of the Compensation Committee, from October 1999 to March 2006, Mr. Terino served as a director of EBT International, Inc., a then publicly traded web content management software company, where he was Chairman of the Audit Committee and a member of the Compensation Committee. Mr. Terino also previously served as Chief Executive Officer and Chief Financial Officer of Arlington Tankers Ltd., an international seaborne transporter of crude oil and petroleum products, from July 2005 until December 2008, when the company merged with General Maritime Corporation. From September 2001 to June 2005, Mr. Terino was Senior Vice President, Chief Financial Officer and Treasurer of Art Technology Group, Inc., a then publicly traded eCommerce software company. Prior to 2001, Mr. Terino held senior financial and operational management positions over a 15-year period with several publicly traded technology and educational publishing companies. Mr. Terino began his career at Deloitte & Touche and spent nine (9) years in their consulting services organization. Mr. Terino earned a BS degree in Management from Northeastern University and an MBA from Suffolk University.

About Starboard Value LP

Starboard Value LP is a New York-based investment adviser with a focused and differentiated fundamental approach to investing in publicly traded U.S. small cap companies. Starboard invests in deeply undervalued small cap companies and actively engages with management teams and boards of directors to identify and execute on opportunities to unlock value for the benefit of all shareholders.

About Oliver Press Partners, LLC

Oliver Press Partners, LLC was founded in 2005 by Augustus K. Oliver and Clifford Press and manages several investment funds, including OP Select Fund, LP.

Investor contacts:
Peter Feld, (212) 201-4878
Gavin Molinelli, (212) 201-4828
www.starboardvalue.com

¹ Does not include unexercised options that have been granted as part of the Board's compensation program.

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SOURCE Starboard Value LP

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