Updated from 6 p.m. EDTIn software country, the lawsuits are flying thick and fast. Late Friday, PeopleSoft ( PSFT) announced it sued Oracle ( ORCL), saying the database maker issued a sham takeover offer when it really just wanted to disrupt PeopleSoft's business. The suit, which asks a California state court to shut down Oracle's takeover bid, wasn't unanticipated. Oracle CEO Larry Ellison earlier this week
If that weren't enough, J.D. Edwards filed a couple of
suits of its own Thursday. One was filed against Oracle in Colorado state court and another, in California, against Oracle CEO Larry Ellison and Oracle Vice President Charles Phillips. J.D. Edwards said Oracle had been "assisted by the deception and subterfuge of Charles Phillips," the former software analyst at Morgan Stanley, the bank that was representing J.D. Edwards in its merger with PeopleSoft. Phillips left that post less than a month ago to join Oracle, where he became a principal adviser to Ellison. In its suit, J.D. Edwards accuses Phillips of "industrial espionage." Phillips used his position as an analyst to gain access to J.D. Edwards' executives and discuss strategy with them, but he didn't tell them he was about to join Oracle, the suit alleged. J.D. Edwards says he later used that information to help Ellison in a plan to hurt J.D. Edwards' business. In a separate lawsuit, J.D. Edwards called Oracle's takeover offer for PeopleSoft "illusory." It says Ellison's true intent was to disrupt the merger of PeopleSoft and J.D. Edwards, which would have presented Oracle with a more formidable competitor. In an underhanded follow-up to its hostile takeover bid, the suit alleges, Oracle sales reps have contacted the customers of both companies to persuade them to quit buying products while Oracle's offer is pending. Late Friday, Oracle issued a statement calling the J.D. Edwards suits "nothing more than a smokescreen." Said Oracle spokesperson Finn, "This is a tactic designed solely to distract PeopleSoft shareholders from making a choice while PeopleSoft management remains intent on keeping hefty pay packages and neglecting the best interests of shareholders." In related news, SEC filings made today show that even before PeopleSoft CEO Conway was forced to fend off Oracle's hostile takeover bid, his job contract was sweetened in case he were pushed out of his own company. Besides increasing his severance, a new deal will allow him to immediately tap into $11.4 million in restricted stock and will cause his options to vest immediately.
PeopleSoft says the change was negotiated before Oracle said it would try to acquire PeopleSoft on June 6. Under the new terms, if Conway loses his job other than for good reason or if he voluntarily leaves PeopleSoft, he'll be eligible to receive severance payments of two years' base salary plus a target bonus. Previously he was in line for a payout equal to one year's base salary plus target bonus. For the past two years, Conway has been paid a salary of $1 million. In 2002, he received a bonus of $1.92 million. In another change, if PeopleSoft sees a change in control such as a takeover, Conway's unvested options and restricted stock will immediately vest. Under the old terms, the vesting of his restricted stock and options would have been accelerated by only 12 months. At the end of 2002, Conway held 625,000 unvested shares of restricted stock valued at $11.4 million. He owned another 4.1 million options priced at between $14.88 and $29.29. At the close of last year, his in-the-money exercisable options were valued at $6.3 million. Another $4.4 million worth of in-the-money shares couldn't be exercised yet.