Ocho Publishes Letter to the Shareholders of Digimarc Corporation

Core Viewpoint - Ocho Investments LLC, which holds 5.2% of Digimarc Corporation's stock, is urging shareholders to vote "WITHHOLD" on CEO Riley McCormack and Chair Kathleen Kool, and to "VOTE NO" on the company's say-on-pay proposal at the upcoming Annual Meeting on May 7, 2025 [1][2]. Group 1: Reasons for Voting Recommendations - Ocho believes shareholders deserve an experienced CEO who can deliver tangible results and communicate transparently [2]. - The company should implement fair compensation practices that align management performance with shareholder value [2]. - A strong and capable Chair is necessary to effectively oversee the Board, which is currently lacking [2]. Group 2: Performance Critique - McCormack's four-year tenure has seen a 60% decline in stock price, no growth in revenue per share, and declining net Annual Recurring Revenue (ARR) [6]. - The company has faced continued operating losses and has had to reduce investments in employees and the business [6]. - There has been a loss of credibility with investors due to a lack of transparent communication from management [6]. Group 3: Say-on-Pay Concerns - Ocho criticizes the incentive plan for misaligning management interests with those of shareholders, particularly due to a change in compensation metrics shortly before the loss of a major commercial contract [6]. - This change allowed executives to receive nearly four times the payout under the new plan compared to the previous one, despite poor company performance [6]. Group 4: Chair's Performance - Kathleen Kool, as Chair of the Compensation Committee, is criticized for not addressing the significant loss in shareholder value and the CEO's poor performance [6]. - Kool has not been willing to meet with large shareholders unless they communicate publicly, which raises concerns about her commitment to shareholder interests [6]. - She opted to receive her annual retainer in cash rather than stock, indicating a lack of confidence in the company's future [6].