Sandell Issues Open Letter to the Shareholders of JDS Uniphase

Subject: Sandell Issues Open Letter to the Shareholders of JDS Uniphase
From: Thomas Sandell
Date: 13 May 2015

Dear Fellow Shareholders:

For some time we have been seeking to see increased value delivered to the shareholders of JDSU, who have suffered several years of under-performance, missed expectations, and broken promises at the hands of the Company’s existing management team and Board of Directors (the “Board”). While the proposed spin-off of the Company’s CCOP business was a positive development, we and many other investors, in addition to numerous members of the analytical community, have thought that a sale of CCOP prior to a spin-off would ultimately result in more value accruing to the shareholders of JDSU. Recent actions suggest to us, however, that the Company does not intend to sell CCOP prior to its spin-off, and has filed documents with the SEC discussing the proposed CCOP spin-off entity, Lumentum Holdings Inc. (“Lumentum”).

Knowing that a spin-off of CCOP was in the works, we made a point of issuing a public letter to the Board on February 2, 2015 highlighting the need for such spin-off entity to conform with best governance practices and explicitly called for its governing documents to allow a majority of shareholders to act by written consent and call special meetings, as well as ensure that such entity’s board was not a classified board. The Board has instead chosen to blatantly ignore our letter and in Lumentum’s SEC documents it appears that Lumentum does not intend to permit shareholders to take action by written consent, does not intend to permit shareholders to call special meetings, and intends to allow vacancies on Lumentum’s board of directors to be filled by the remaining directors (without affirming the shareholders’ right to do so.) This is both an affront to the shareholders of JDSU, who through their ownership of JDSU are the ultimate owners of Lumentum, as well as a rejection of best governance practices. Furthermore, this flies in the face of the recent actions of many other companies such as eBay, Gannett, Manitowoc, and DuPont, who have announced public spin-offs and subsequently taken steps to see that their spin-off entities do not contain shareholder-unfriendly entrenching devices.

Left un-challenged, it appears that the Board of JDSU will likely embed numerous entrenching mechanisms in the corporate documents of Lumentum, all of which serve to impinge upon the rights of shareholders. This is of particular relevance to Lumentum given the highly-publicized need for consolidation in the optical components space and the many calls from industry participants who advocate a sale of Lumentum. As currently contemplated, the board of Lumentum has the ability to reject an acquisition proposal irrespective of the desire of shareholders and shareholders would have limited ability to exert any influence on the board in a timely manner. Shareholders must have meaningful ability to hold the board accountable, as well as have the final say on whether to accept an offer to purchase Lumentum.

While we have made our position abundantly clear, it is important that other shareholders who believe that the structure of Lumentum should conform with best governance practices articulate these sentiments to the Company now. While there are numerous other issues that we have with the management and Board of JDSU, the proposed Lumentum spin-off is expected within the next few months, meaning there is a need for immediate action.


Thomas Sandell
Chief Executive Officer