Enterprise software maker Siebel Systems on Tuesday issued a string of new corporate compensation policies and said it would not oppose a shareholder's application for reimbursement of legal fees in a lawsuit filed over stock options issued to CEO Tom Siebel.
The company reported that it would not contest an application by the Teachers' Retirement System of Louisiana (TRSL), a shareholder in the enterprise software maker, that seeks reimbursement of legal fees that are related to a lawsuit filed against Siebel and its board of directors. The software maker said the claim would not exceed $900,000.
In September 2002, TRSL filed a suit that alleges that members of Siebel's board breached their fiduciary duties by authorizing excessive compensation for the chief executive. The suit claimed that the customer relationship management (CRM) software maker incorrectly accounted for stock options that were allegedly granted below fair market value.
The company also on Tuesday announced a slew of new corporate governance policies. Siebel reported that it would add a new member to the company's board of directors, revamp its methods for selecting board members and expand its internal compensation committee in order to prevent future misunderstandings.
Siebel also said it would shift its practices regarding board members' stock option awards, giving shareholders more information on how executives and other employees are paid.
In January, Siebel canceled nearly 26 million stock options--valued at more than $56 million--that it had granted the CEO, citing concerns about diluting the value of its stock for other shareholders. The canceled options represent all options granted to Siebel in the last four years, reducing the executive's stake in the company from 13.5 percent to 10.7 percent.
The stock issue was not the first public embarrassment for Siebel, who has previously created controversy in the CRM software segment with off-the-cuff comments and whose remarks to a Goldman Sachs conference in 2001 led to a $250,000 fine from the U.S. Securities and Exchange Commission. Siebel foreshadowed positive earnings at the conference in a manner the SEC believed was not in keeping with regulations that forbid companies from disclosing material information before releasing the news to the public.
The executive has also come under fire at times for making provocative comments regarding the industry that he helped found and that his company still dominates. Last year, Siebel surprised attendees of an industry trade show by saying in a keynote speech that CRM was "dead."
Siebel has since defended his comments, saying they were made in reference to his belief that a new generation of enterprise applications would render current CRM applications obsolete.
On Monday, Siebel said he is maintaining a cautious outlook on the business software market, pointing out that the sector has experienced a number of false starts over the past several years.
The San Mateo, Calif.-based company is currently reorganizing in an effort to deal with slowed demand for enterprise applications and a falling stock price.