Risk & Compliance

Siebel Makes Overtures to Shareholders

The software giant takes steps to head off a potential uprising at today's annual meeting.
Stephen TaubJune 8, 2005

Under attack by shareholders for its corporate governance policies and its management decisions in general, Siebel Systems Inc. took a few major steps in advance of today’s annual meeting.

In a regulatory filing, the software giant announced that the company will institute its first quarterly dividend, $0.025 per share — 10 cents per share on an annualized basis. “The dividend reflects our confidence in the company’s long-term track record of positive cash flow generation,” stated chief executive officer George Shaheen in a letter to shareholders.

He noted that the dividend also signals a substantial effort by the company to return capital to shareholders over time without impairing Siebel’s financial strength and flexibility to pursue acquisitions. Shaheen, a former non-executive director of the company, was brought in two months ago to help turn around the software maker that, according to the BusinessWeek website, has been in a “three-year tailspin.”

In addition, the company announced plans to add two independent directors, expanding the current board from eight directors to ten, seven of whom will be independent.

Shaheen also said that the company has retained McKinsey & Co. and Goldman, Sachs & Co. to help “evaluate and improve our operating and financial performance and evaluate potential capital structure alternatives, respectively.” He did not elaborate further.

The chief executive announced several plans for cutting costs and emphasized that he is keenly aware of the current market environment and the company’s future challenges. He added that he will continue to consider the opinions of shareholders, employees, partners, and customers.

Shaheen is apparently trying to stave off a shareholder revolt at today’s annual meeting, where an estimated 30 percent of those voting are expected to withhold their votes for the directors up for election, including chairman Tom Siebel, according to the BusinessWeek website. Several activist investors are threatening to launch a proxy fight at next year’s annual meeting if Siebel doesn’t turn around, according to the report.

“If they think next year [will come] along without shareholders seeking alternative board members, they’re out of their mind,” Marc Lehmann, a partner at activist hedge fund Jana Partners, told the website.