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PeopleSoft Shareholders Approve Board Nominees

They voted against a recommendation to oust CEO Craig Conway and three other directors, but also OK'd a proposal to expense stock options.
PeopleSoft Inc. stockholders on Thursday re-elected the company's board nominees, voting against a recommendation to oust CEO Craig Conway and two others from the governing body.

Stockholders representing 81% of outstanding shares also approved a shareholder proposal that the board expense stock options. The board said it would give the recommendation "careful consideration" as part of its evaluation of accounting treatment of option grants.

More drama had been expected at the annual meeting amid the $9.4 billion hostile takeover bid by Oracle. However, Oracle withdrew its slate of directors after the Justice Department sued to block the proposed sale. Oracle had hoped to gain control of the board to approve the merger.

A trial on the government's suit is set to begin in June in U.S. District Court in San Francisco.

A PeopleSoft spokesman said the nominee vote reflected shareholders' confidence in the company's leadership. "We're gratified from the response of our stockholders," he said. "They clearly believe the board of directors is governing the company in the best interest of stockholders."

The four PeopleSoft directors who were up for re-election included Conway, George Battle, Frank Fanzilli Jr., and Cyril Yansouni.

Glass Lewis & Co., a San Francisco firm that advises investors in proxy votes, had urged shareholders to reject Conway because of his role in pushing for a costly customer-incentive program that was meant to derail the Oracle bid. Glass Lewis also recommended against Battle and Yansouni, both members of the company's compensation committee. The firm said the panel overpaid Conway and other top executives.

The stock-option proposal, filed by the American Federation of State, County and Municipal Employees Pension Plan, said failing to expense options "distorts reported earnings." The PeopleSoft board had recommended shareholders reject the proposal.

However, the board may have no choice in the matter. The Financial Accounting Standards Board is expected to propose a rule soon calling for mandatory expensing of options starting next year.

The final tally of the shareholder vote will be reported in documents PeopleSoft is scheduled to file with the Security Exchange Commission for the quarter ending March 31.