PeopleSoft held a quiet shareholders’ meeting Thursday, at which the company’s shareholders reelected the company’s incumbent directors and passed a resolution urging PeopleSoft to expense the cost of stock option grants.
The meeting looked to be more fiery before the U.S. Department of Justice moved last month to block Oracle’s proposed hostile takeover of the company. Oracle responded to that rejection by withdrawing a slate of nominees it planned to back for spots on PeopleSoft’s board. Without Oracle’s opposition, the four PeopleSoft board members up for reelection easily won shareholders’ approval.
A new research firm offering voting recommendations on shareholder issues, Glass Lewis & Co., caused a stir earlier in the month by recommending stockholders not reelect to the board PeopleSoft CEO Craig Conway. Glass Lewis objected to PeopleSoft’s “Customer Assurance Plan,” which adds to some contracts a clause promising expensive payouts if PeopleSoft is acquired by a company that does not meet certain product and customer service quality benchmarks. PeopleSoft says the program is intended to assuage customer concerns about Oracle’s campaign.
Despite Glass Lewis’ advice, Conway won support of more than 94% of the votes cast. His reelection to another two-year term had 279 million shares cast in favor and nearly 15 million cast against.
PeopleSoft’s shareholders defied the company’s management on another issue, however, narrowly passing a resolution introduced by shareholders calling on the board to expense stock option costs. Opposed by PeopleSoft’s board, the measure passed, with 132 million shares voted in favor and 113 million voted against.
A similar initiative passed last week at HP’s annual meeting, again over company objections. The issue has become a priority cause for some corporate governance watchdogs, who see stock options as a hidden cost that should be recorded on companies’ balance sheets. Under current accounting rules, companies can choose whether or not to expense options. The U.S. Financial Accounting Standards Board is pushing to make expensing mandatory.
If PeopleSoft had expensed stock options in 2003, its $85 million net income for the year would have been a $75.4 million net loss, the company said in its most recent annual report.
PeopleSoft board member George “Skip” Battle, who led Thursday’s meeting, said the company’s board does not support expensing options until all companies are required to do so. Still, the board will be examining the issue in “considerable detail,” particularly in light of the shareholders’ vote, he said.
Conway and PeopleSoft Chief Financial Officer Kevin Parker spoke briefly at the meeting, highlighting PeopleSoft’s strategy and accomplishments over the past year. They also fielded several questions about Oracle’s ongoing takeover campaign, now stalled as Oracle battles the Justice Department in court to overturn the agency’s antitrust objections to a deal.
Battle answered a shareholder question about PeopleSoft’s continued opposition to Oracle’s offer even though, at $26 a share, Oracle’s cash bid is higher than PeopleSoft’s recent trading price. That price still isn’t high enough, Battle said.
“We’re here to maximize shareholder value over the long term,” he said.
