News Column

Elliott Sends Letter to the Board of Riverbed

May 27, 2014

Shareholders overwhelmingly vote for change

Clear message that Riverbed needs to engage

NEW YORK--(BUSINESS WIRE)-- Elliott Management Corporation (“Elliott”) today sent a letter to the Board of Directors of Riverbed Technology, Inc. (NASDAQ:RVBD).

The full text of the letter is as follows:

“May 27, 2014

Riverbed Technology, Inc.

199 Fremont Street

San Francisco, California 94105

Attn: Jerry Kennelly, Chief Executive Officer and Chairman of the Board

Dear Members of the Board of Directors:

I am writing to you on behalf of Elliott Associates, L.P. and Elliott International Limited (collectively, “Elliott” or “we”), which collectively own or have economic exposure to approximately 10.6% of the common stock and equivalents of Riverbed Technology, Inc. (“the Company” or “Riverbed”), making Elliott one of the Company’s largest shareholders.

The results of last Thursday’s annual meeting reflect a clear and unmistakable message from Riverbed’s shareholders to its Board: Your behavior this year has been wrong – stop entrenching and engage. As you are now aware, Shareholders by an overwhelming majority:

  • Voted OFF the only Board member up for election this year, and
  • Voted AGAINST the Company’s executive compensation plan

    This clear message from your shareholders follows the resignation of the other two Board nominees who were up for re-election this year and who thereby avoided this year’s shareholder vote by leaving the Board. Since January, Riverbed’s Board has gone from nine to just six members. Had the entire Board been up for a vote at last week’s meeting, we have no doubt that Riverbed would have a completely new Board today.

    This is a powerful message from shareholders and we hope the Board views it as a wake-up call. This clear rejection of the Board’s strategy to date is all the more striking when one considers that shareholders took this action entirely of their own volition, without the prompting of a proxy fight. Shareholders and ISS and Glass Lewis -- the nation’s two leading shareholder advisory services -- independently recognized that corporate governance at Riverbed is too self-serving and the Board is too entrenched. Riverbed’s Chairman and CEO recently defended the Board’s entrenchment by telling a reporter that the Company has “nothing broken to fix.” This statement reflects a profound disconnect from shareholder sentiment as evidenced by last week’s vote.

    It is time for the remaining Board members to start behaving in a manner consistent with your fiduciary duties. Elliott today proposes a meeting among the Board, senior management and Elliott to discuss a path forward with the goal of maximizing shareholder value. I had hoped to meet some of the Board members at the annual meeting last week – incredibly, all of the non-executive Board members chose to dial in rather than meet the shareholders face-to-face.

    Inaction is no longer an option for this Board. It is time to stop ignoring the clear will of your shareholders. You are well aware that there are a number of potential buyers that are interested in pursuing an acquisition at a significant premium, and our $21 per share offer remains outstanding. Access to diligence combined with a competitive process could lead to an extraordinary outcome for shareholders. A meeting – in the next two weeks – is the right place to start.

    Elliott remains committed to this effort and intends to exercise all rights at its disposal to ensure that the Board’s duties to shareholders are fulfilled. In that regard, we feel that we must urge the Board to resist any temptation to take measures beyond those already taken to thwart or interfere with the rights of shareholders to support a sale of the Company. As you know, your Chairman and two key directors are up for reelection next year. If the Board fails to listen to its shareholder base and insists on further entrenchment, we are confident shareholders will again vote down these three Board members and replace them with nominees who are focused on maximizing shareholder value.

    We are hopeful that will not be necessary and that the Board will now commit to open-minded engagement with shareholders. As one of Riverbed’s largest shareholders, we think a meeting between Elliott and the Board is the right place to start. We request such a meeting in the next two weeks and are prepared to discuss immediately with you and your advisors how best to move forward. As always, I remain personally available to answer any questions that you may have in preparation for our meeting.

    Very truly yours,

    Jesse Cohn

    Portfolio Manager”

    Cautionary Statement Regarding Forward-Looking Statements

    The information herein contains “forward-looking statements.” Specific forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and include, without limitation, words such as “may,” “will,” “expects,” “believes,” “anticipates,” “plans,” “estimates,” “projects,” “targets,” “forecasts,” “seeks,” “could,” “should” or the negative of such terms or other variations on such terms or comparable terminology. Similarly, statements that describe our objectives, plans or goals are forward-looking. Our forward-looking statements are based on our current intent, belief, expectations, estimates and projections regarding the Company and projections regarding the industry in which it operates. These statements are not guarantees of future performance and involve risks, uncertainties, assumptions and other factors that are difficult to predict and that could cause actual results to differ materially. Accordingly, you should not rely upon forward-looking statements as a prediction of actual results and actual results may vary materially from what is expressed in or indicated by the forward-looking statements.

    About Elliott Management Corporation

    Elliott Management Corporation manages two multi-strategy hedge funds which combined have more than $24 billion of assets under management. Its flagship fund, Elliott Associates, L.P., was founded in 1977, making it one of the oldest hedge funds under continuous management. The Elliott funds' investors include pension plans, sovereign wealth funds, endowments, foundations, funds-of-funds, high net worth individuals and families, and employees of the firm.

    Media Inquiries:

    Sloane & Company

    Elliot Sloane, 212-446-1860


    Alexandra Meredith, 212-446-1887

    Source: Elliott Management Corporation

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