Acacia Research Corporation (Nasdaq: ACTG) (“Acacia” or the “Company”) today announced that its Board of Directors (the “Board”) has been conducting an internal investigation into the apparent misconduct of former Chief Executive Officer Clifford Press. After the Board had informed Mr. Press that it was aware of potential instances of misconduct that could qualify for a termination for cause, Mr. Press resigned as both Chief Executive Officer and as a director of the Company. Mr. Press confirmed such resignation on a phone call with a majority of the Board and external counsel. Mr. Press had previously issued a statement pertaining to his acknowledged retirement in the Company’s October 31, 2022 press release, noting he was “enormously grateful to the Board and everyone on the Acacia team.”
The Board’s formal investigation began subsequent to Mr. Press’ departure and upon the Board becoming aware of a growing number of potential issues pertaining to his use of corporate funds and resources. While the internal investigation is ongoing, preliminary findings include the following:
- Mr. Press provided inaccurate information on certain submissions of corporate expenses.
- Mr. Press appears to have misused corporate funds for personal use, including travel and entertainment with people not associated with Acacia.
- Mr. Press made substantial charitable donations in his own name using corporate funds.
- Mr. Press failed to follow the Board’s directive in relation to a material contract. On multiple occasions, Mr. Press then misrepresented to the Board and his fellow Board members that he had complied with the Board’s directive. Mr. Press' failure to comply and his subsequent misrepresentation led to a substantial further liability, which was disclosed in the Company’s 10Q for the period ended September 30, 2022, which was filed on November 14, 2022.
The Board’s internal investigation, which is being supported by independent legal counsel, is continuing to review Mr. Press’ use of corporate funds and resources during his tenure. Based upon preliminary information obtained through the ongoing internal investigation, the Board does not currently anticipate any material changes to Acacia’s historical financial statements or related disclosures. Nonetheless, the Board is committed to identifying whether any corporate abuse occurred and, if appropriate, seeking restitution and other remedies for the benefit of the Company’s shareholders.
Over the past several weeks, the Company has made Mr. Press’ representatives aware of certain of these preliminary findings, and Acacia had been engaging in good faith discussions with him and his representatives in an effort to provide a severance package that subtracted monies owed to the Company. Mr. Press’ representatives, however, have made the Company aware that he is seeking a severance package that includes, among other things, a payment that is exponentially larger than what he would have been owed in the event he had not resigned and had simply been terminated without cause. Mr. Press’ representatives have made it clear that if the Company does not submit to his demands, that he will seek to publicly attack Acacia and its affiliates.
On December 30, 2022, Mr. Press filed a lawsuit against Acacia in the Delaware Court of Chancery to be reinstated as a director of the Company. Acacia believes the lawsuit lacks merit and is a transparent attempt on the part of Mr. Press to distract from his apparent misconduct. Acacia has filed arbitration proceedings pursuant to its employment agreement with Mr. Press.
About the Company
Acacia is a permanent capital platform with a strategy to purchase businesses based on the differentials between public and private market valuations. Acacia leverages its (i) access to flexible capital that can be deployed opportunistically as a result of its strategic partnership with Starboard, (ii) disciplined focus on identifying opportunities where it can be an advantaged buyer, initiate a transaction opportunity spontaneously, avoid a traditional sale process and complete the purchase of a business, division or other asset at an attractive price, (iii) willingness to invest across industries and in off-the-run, often misunderstood assets that suffer from a complexity or multi-factor discount, (iv) relationships and partnership abilities across functions and sectors, and (v) strong expertise in corporate governance and operational transformation. Acacia seeks to identify opportunities where it believes it is an advantaged buyer, where it can avoid structured sale processes and create the opportunity to purchase businesses, divisions and/or assets of companies at an attractive price due to Acacia’s unique capabilities, relationships or expertise, or Acacia believes the target would be worth more to it than to other buyers. Additional information about Acacia and its subsidiaries is available at www.acaciaresearch.com.
Safe Harbor Statement
This news release contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These statements are based upon the Company’s current expectations and speak only as of the date hereof. The Company’s actual results may differ materially and adversely from those expressed in any forward-looking statements as a result of various factors and uncertainties, including the final results of the Board’s internal investigation described herein, the Company’s ability to successfully implement its strategic plan, the ability of the Company to renegotiate the terms of its relationship with Starboard Value LP, the ability to successfully identify and complete strategic acquisitions of businesses, divisions, and/or assets, the ability to successfully develop licensing programs and attract new business, changes in demand for current and future intellectual property rights, legislative, regulatory and competitive developments addressing licensing and enforcement of patents and/or intellectual property in general, general economic conditions, including the impact of the COVID-19 pandemic and the success of the Company’s investments. The Company’s Annual Report on Form 10-K, and other SEC filings discuss some of the important risks and uncertainties that may affect the Company’s business, results of operations and financial condition. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.