October 5, 2012 – Tessera Technologies (Nasdaq:TSRA) is giving CEO Robert A. Young a big financial incentive to spin off one of its two businesses within the next several years, one of the company’s key long-term strategic goals. The directive, issued by the board of directors and compensation committee, authorizes immediate vesting of 550,000 stock options at their Oct. 2 pricing, worth roughly $7.54M. It’s contingent on successful spin-out of one of the company’s business units by March 31, 2015; if no spinoff happens by that date, the promised stock options will expire.
"The 2012 compensation arrangement provides an additional financial incentive for Bob to pursue a key strategic alternative, and reflects the board’s continuing efforts to closely align executive compensation with the best interests of stockholders," stated company chairman Robert J. Boehlke.
Tessera Technologies is a holding company with operating subsidiaries in two segments. Its Intellectual Property unit handles license agreements with semiconductor companies and outsourced semiconductor assembly and test companies, while a Digital Optics division covers imaging and optics products and capabilities.
Reuters quotes Tessera’s newly appointed CFO, Richard Neely, suggesting the strategy centers on the digital optics side of the business: "We’ve been talking about building up the digital optics business and spinning it off." He was hired in August 2012 to build up the Digital Optics business "into a global, vertically integrated supplier of original design camera modules for handsets and other applications," while also helping grow the IP licensing business.
In a related SEC filing, Tessera reveals more of the incentive plan, as well as more details of Young’s overall compensation scheme — including his base annual salary ($684,000), potential annual bonuses equaling that salary, and $150,000 per year to offset expenses from traveling between his Connecticut home and the company’s offices in California.
Tessera currently projects 3Q12 sales of $66.5M-$69.0M, up 8%-12% from 2Q12. Most of that is in the IP licensing side ($53.0M-$54M, flat with 2Q), helped by a recent settlement with Amkor Technology. The digital optics business is expected to generate $13.5M-$15.0M in sales in 3Q, up from $8.4M in 2Q12.