Updated from Feb. 4
PeopleSoft(PSFT Quote - Cramer on PSFT - Stock Picks) CEO Craig Conway's golden parachute, estimated to be worth $25 million according to a regulatory filing Tuesday, would soar to about $40 million, based on
Oracle's (ORCL Quote - Cramer on ORCL - Stock Picks) latest takeover bid.
On Wednesday, Oracle announced that it is
raising its offer to $26 a share from $19.50 a share. The latest deal values PeopleSoft at $9.4 billion. Previously, PeopleSoft seemed to be successfully repelling a hostile takeover bid by its larger rival.
PeopleSoft, which has been criticized by corporate governance advocates for overpaying its executives, would give Conway a severance equal to two years' base salary, which currently sits at $1 million a year, plus an unspecified performance bonus, according to a filing with the
Securities and Exchange Commission.
In the event of a change of control, the following would also occur:
Conway's 4 million unvested stock options, worth $12 million as of Dec. 31, will become fully vested. The pricing of the options would vary, depending on the stock price at the time of the change of control.
His 500,000 shares of restricted stock, valued at $11.4 million as of Dec. 31, also would fully vest.
Those estimates are based on PeopleSoft's closing stock price of $22.79 on Dec. 31. If Oracle's bid at $26 a share succeeds, Conway's windfall would be even higher -- an estimated $40 million.
The disclosure also says Conway and two other executives have "retention bonus arrangements that contain acceleration of service provisions" if there is a change of control. But it fails to disclose who those two executives are and give any detail on the so-called service provisions.
In yet another apparent protection for Conway, the employment agreement says if vesting of Mr. Conway's restricted stock cannot be accelerated, then PeopleSoft would make a cash payment. The payment would be equal to the fair market value of the unvested restricted stock owned by Conway at the date his employment terminates or the date of the change of control.
In addition to the options and stock, whose vesting would be accelerated under the golden parachute, Conway held $4 million exercisable options worth $17.2 million as of Dec. 31. Those exercisable options would be worth even more -- an estimated $30 million -- based on Oracle's new offer price of $26 a share.
According to a review of SEC filings, details of the golden parachute were actually approved by the board's compensation committee last April, before the company's last annual shareholder meeting and before Oracle launched its hostile bid. However, according to the filing Tuesday, the formal restated employment agreement was executed Friday.
A PeopleSoft spokesman declined to comment.
Details of the golden parachute come even as Conway had been dismissing
Oracle's hostile bid as all but dead and accused his rival of stalling on a government antitrust investigation into the proposed merger. Oracle also has proposed a slate of candidates to run for the PeopleSoft board of directors, and PeopleSoft recently moved up the date of its annual meeting to March 25.
Bill Snyder
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