Dear Fellow Shareholders,
Today is an important day for all Turtle Beach stakeholders, as it marks the first day that shareholders have the opportunity to vote for sorely needed boardroom change at the 2022 Annual Meeting of Shareholders (the “Annual Meeting”). We believe that your vote will have a profound impact on Turtle Beach and your investment in the Company. After years of abysmal governance, dismal capital allocation and poor share price performance, time is of the essence.
When the current CEO, Juergen Stark, took the helm over eight years ago, Turtle Beach was already the dominant market leader in its primary category, with best-in-class profitability. But since Mr. Stark took the job, the Company’s performance has suffered across every major metric. We contend the Company has failed operationally, failed strategically and failed for shareholders:
- The Company’s total shareholder return (TSR) has underperformed its own industry peer set by more than 200% and shares have declined by over 65% in aggregate1
- EBITDA margin, a widely regarded metric for corporate profitability, has been cut in half2
- Revenue growth has slowed to 0% at the midpoint of the guided annual range3
- The Company has written down more than $100 million of Stark-led investment initiatives4
We believe that shareholders should have no doubt: the current leadership team has failed shareholders, and the current Board has simply not held management accountable. The Board needs a full reset with highly qualified directors who are committed to ensuring the best interests of shareholders are paramount at Turtle Beach.
In addition to the critical function of selecting Company leadership, Turtle Beach’s Board is also responsible for engaging with bona fide potential acquirors of the Company to explore whether immediate, certain, and attractive risk-adjusted value can be achieved for shareholders.
We believe that there are multiple parties that would be willing to acquire Turtle Beach at an attractive premium but based on our experience trying to meaningfully engage with the Board regarding our premium all-cash offers, we are highly concerned that the Board has failed to fully explore third party acquisition overtures in a manner fitting of a public company.
As has been reported publicly, we have historically made attempts to acquire the entirety of Turtle Beach, and while we believe that we put our best foot forward to engage with the Board and the Company’s advisors to finalize our offer, the Company has stated that we have made “repeated misstatements and omissions” regarding our acquisition attempts of the Company.
Rather than attempt to address each of the Board’s misstatements about us, we believe that shareholders deserve the right to judge for themselves who has been misstating the record.
As such, we are including with this press release the following correspondences with Turtle Beach:
- A private letter that we sent to a subset of the Board in August 2021 that comprehensively details our efforts to acquire the Company over the summer of 2021; and
- Emails that we sent to the Company and its representatives this past winter in which we requested to sign an NDA to receive confidential information.
We encourage all shareholders to read these emails and assess for yourselves if i) we attempted to put our best foot forward; ii) if you, as a shareholder, would have wanted the Board to engage with us in a constructive fashion; and iii) if this is the Board that you want to be watching out for your interests.
If, after reading these emails, it is not yet clear that the current Board is highly conflicted and entrenched, we would encourage you to pay special attention to the information that we will be releasing in the coming weeks. We believe that by the Annual Meeting on June 7, it will be overwhelmingly evident that the current Board has lost its way and must be replaced to end the status quo of extremely poor governance and massive underperformance.
As one of the largest shareholders of the Company, we have partnered up with another large shareholder of Turtle Beach, SCW Capital Management, to recruit leading executives to replace the current members of the Board.
Such candidates represent the best and brightest in their fields and have historical experience in video game operations, marketing, brand-building, capital allocation and M&A. Importantly, each prospective member of the Board brings a commitment to integrity and transparency. Please feel free to learn more about each of our nominees to the Board at www.ResetTurtleBeach.com.
Today is the day to vote for change, and we encourage you to do so immediately herein:
We urge you to vote the WHITE proxy card to send the message to Turtle Beach Corporation’s leadership and Board that shareholders deserve better. Vote the WHITE proxy card TODAY to support a superior slate of highly qualified individuals, who will be better stewards of your investment. Please vote each and every WHITE proxy card you receive, as you may own shares in more than one account. If you voted a Blue card from Turtle Beach, you have every right to change your vote by voting on the enclosed WHITE proxy card. Only your latest dated vote counts.
William Z. Wyatt
The Donerail Group