PeopleSoft shareholders re-elected the company's incumbent directors and passed a resolution urging the company to...
expense the cost of stock option grants.
The meeting had been expected to be more fiery before the US Department of Justice moved last month to block Oracle's proposed hostile takeover of PeopleSoft.
Oracle responded to that rejection by withdrawing a slate of nominees it planned to back for spots on PeopleSoft's board. Without Oracle's opposition, the four PeopleSoft board members up for re-election easily won shareholders' approval.
A new research firm offering voting recommendations on shareholder issues, Glass Lewis, caused a stir earlier in the month by recommending stockholders not re-elect to the board PeopleSoft chief executive officer Craig Conway.
Glass Lewis objected to PeopleSoft's "Customer Assurance Plan," which adds to some contracts a clause promising expensive payouts if PeopleSoft is acquired by a company that does not meet certain product and customer service quality benchmarks. PeopleSoft said the programme is intended to assuage customer concerns about Oracle's campaign.
Despite Glass Lewis' advice, Conway won support of more than 94% of the votes cast. His re-election to another two-year term had 279 million shares cast in favour and nearly 15 million cast against.
PeopleSoft's shareholders defied the company's management on another issue, however, narrowly passing a resolution introduced by shareholders calling on the board to expense stock option costs. Opposed by PeopleSoft's board, the measure passed, with 132 million shares voted in favour and 113 million voted against.
A similar initiative passed last week at Hewlett-Packard's annual meeting, again over company objections. The issue has become a priority cause for some corporate governance watchdogs, who see stock options as a hidden cost that should be recorded on companies' balance sheets.
Under existing accounting rules, companies can choose whether or not to expense options. The US Financial Accounting Standards Board is pushing to make expensing mandatory.
If PeopleSoft had expensed stock options in 2003, its $85m net income for the year would have been a $75.4m net loss, the company said in its most recent annual report.
PeopleSoft board member George "Skip" Battle said the company's board does not support expensing options until all companies are required to do so. Still, the board will be examining the issue in "considerable detail", particularly in light of the shareholders' vote.
Stacy Cowley writes for IDG News Service