January 23, 2004 10:24 PM PST

Oracle names potential PeopleSoft directors

Oracle has named five prospective replacements to PeopleSoft's board, a necessary step in the company's efforts to complete a hostile takeover of its rival in the market for business software applications.

The announcement, made late Friday, had been anticipated, because Oracle faced a deadline to name the directors by next week, and the database giant had said it planned to put forth an opposing slate. Oracle needs to put its own people on the board to overturn PeopleSoft's antitakeover measure, commonly referred to as a poison pill.

Oracle nominated two university professors: Duke Bristow, an economy professor at the University of California at Los Angeles, who also serves as director of the UCLA business school's corporate governance program; and Artur Raviv, a finance professor at Northwestern University's Kellogg Graduate School of Management.

Two venture capitalists also were nominated: Richard Clemmer, president of Venture Capital Tech and former chief executive of PurchasePro.com, and Laurence Paul, managing principal of Laurel Crown Capital.

Roger Noall, former senior vice president and chief administrative officer of KeyCorp, also was nominated by Oracle.

"We believe that the incumbent PeopleSoft board of directors has consistently refused to consider its stockholders' best interests regarding the Oracle tender offer," Oracle spokesman Jim Finn said in a statement. "We intend to nominate a slate of directors who will exercise independent judgment in considering the Oracle tender offer and other matters before the PeopleSoft board and provide independent representation for the true owners of PeopleSoft, the stockholders."

Oracle announced its hostile bid last June, when it offered $16 a share for PeopleSoft. Oracle later raised the offer to $19.50 a share. PeopleSoft directors, however, have rejected the bid, saying it undervalued the company.

PeopleSoft shares closed up 7 cents to $22.57 at the end of the regular trading session Friday.

Meanwhile, Oracle is awaiting word on whether the U.S. Department of Justice and the European Commission will challenge the deal. A decision by federal antitrust regulators is not expected until March, while a decision by European regulators could come in April.

Four directors of PeopleSoft's board are coming up for re-election at its shareholder meeting this year. The company recently appointed Michael Maples, a former J.D. Edwards director, to its board, expanding it from seven to eight members.

Because Maples has not yet stood for election by the PeopleSoft shareholders, Oracle said it will seek to introduce a shareholder proposal to change PeopleSoft's bylaws and expand the company's board to nine members, if Maples is not put up for election.

"Michael Maples has never been elected by the stockholders, and we believe that he should stand for election at the PeopleSoft...annual meeting of stockholders," Finn said. "This newly created directorship would be decided by the stockholders at the annual meeting, enabling the PeopleSoft stockholders to elect a majority of the board and determine for themselves who should guide the future of PeopleSoft."

PeopleSoft directors who are up for re-election are George "Skip" Battle, chief executive of Ask Jeeves; Craig Conway, PeopleSoft's chief executive; Frank Fanzilli Jr., retired chief information officer of Credit Suisse First Boston; and Cyril Yansouni, former chairman of Read-Rite. PeopleSoft directors are elected to two-year terms.

"We believe that Larry Ellison's attempt to gain control of PeopleSoft's board of directors is solely to advance Oracle's agenda and is not in the best interests of PeopleSoft's stockholders. We strongly believe that Ellison's hand-picked, paid nominees are biased and would have irreconcilable conflicts of interest, if elected to PeopleSoft's board," PeopleSoft said in a statement. "Each nominee is receiving cash compensation and has signed an agreement with Oracle. We believe their ability to be independent is seriously compromised."

Proxy solicitation experts had largely expected Oracle to create a slate that included business and corporate governance university professors, as well as business executives.

"Corporate governance professors would lend credibility to Oracle's campaign and present a sense that they would be independent directors, rather than in Oracle's back pocket," Tom Ball, senior managing director at Morrow & Co., a New York-based proxy solicitor, has said.

But another executive with a proxy solicitation firm noted that it almost doesn't matter who Oracle presents on its dissident slate.

"Shareholders are going to vote on this slate based on the price Oracle is willing to pay for PeopleSoft," the proxy solicitor said. "It's not like other proxy battles involving a poorly run company, where the investors are looking to elect a competing slate of directors to improve the company's operations."

 

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