Six days before receiving a court ruling in the closely watched Oracle-Justice Department case, PeopleSoft sped up the vesting terms for its employees' 2004 merit-based stock options, according to a filing with the U.S. Securities and Exchange Commission.
The accelerated vesting terms apply if PeopleSoft undergoes a change in control and the employee is terminated within one year from the date that the change takes effect, according to the filing.
| || |
Oracle's day in court
The judge has spoken,
but see what comes next
and how the case unfolded.
The move mirrors one the company made a month before Oracle announced its hostile takeover bid for PeopleSoft, when it gave CEO Craig Conway a boost to his severance package, including an immediate vesting of all his unvested options and restricted stock if there is a change in control at PeopleSoft.
The PeopleSoft filing is among a handful that have been submitted to the SEC in the past several days by PeopleSoft and Oracle, which have both been busy sending letters to employees, following the federal court ruling in favor of Oracle's takeover bid.
Proxy solicitors say the move to keep employees in the fold is one that's frequently used during a proxy fight.
"Maintaining employee morale during a proxy battle is one of the most important missions of management," said Rick Grubaugh, senior vice president with proxy solicitation firm D.F. King & Co. "You can't allow a takeover battle to allow morale to erode. In the tech world, employees are the company."
PeopleSoft, on Sept. 3, modified the terms for its employees' 2004 annual stock option merit grants. The change affects 2,703 employees, none of whom are executives. They'll receive a combined 9.5 million options with a strike price of $17.68.
Shares of PeopleSoft were up 4 cents in morning trading at $19.83.
Following Judge Vaughn Walker's ruling in the U.S. District Court of Northern California, Conway on Friday issued a letter to the company's employees, noting that the ruling "does not mean that Oracle will acquire PeopleSoft" and that there are other challenges to Oracle's bid. Conway's letter was included with the SEC filing.
Oracle also sent a letter to its employees, not only outlining its reason for the buyout, but also asking them to respond with several "key messages," should they be contacted by PeopleSoft customers, according to Oracle's SEC filing.
"These messages are not meant to be used for any sales initiative. The purpose of this information is to provide accurate and truthful information to address anticipated questions and for educational purposes," Charles Phillips, Oracle president, stated in the letter, which was also part of an SEC filing. "We anticipate that PeopleSoft will disseminate incorrect and, or, misleading information to customers about the impact on them of the acquisition, and it is important that we be able to provide the truth and reassure customers their investments will be protected."
Materials that Oracle employees can disseminate to its customers include an open letter from Phillips listing answers to questions frequently asked by PeopleSoft customers.
Phillips also sent letters directly to PeopleSoft customers, informing them of the court's decision and his assessment of where the takeover attempt stands.
"We believe we are in a strong position to absorb this acquisition quickly and efficiently and produce the benefits outlined for customers," Phillips stated in his letter. "Our strategy is focused on a singular, consolidated approach to the future--one brand, one product vision, one go-to-market plan and one global infrastructure. And we've had plenty of time to prepare for this combination."
PeopleSoft, meanwhile, was casting the matter in a different light.
"In fact, during the course of the recent antitrust trial," Conway's letter said, "internal Oracle documents came to light demonstrating that Oracle's strategy was as we believed all along--to create confusion and let PeopleSoft 'twist in the wind.'"