Siebel’s cancellation, covering 25.95 million stock options the company chairman possessed, was approved by the Securities and Exchange Commission following a review of the company’s accounting for the change. With the cancellation, Siebel’s ownership stake in the company he founded has been reduced to 10.7% from 13.5%, according to a Dow Jones report.
The move by Siebel is the latest that he and the San Mateo, California based company have taken to restructure its compensation and options programs at the firm. Previous steps included Siebel lowering his salary to $1 in each of the past two years and the company allowing employees to swap approximately 28 million out-of-the-money stock options for cash or restricted stock in September (see Siebel Offers Rank & File Option Swap ).
The latest action comes on the heels of a Louisiana teachers pension fund lawsuit filed against the company last year and then amended in November . In the suit, the Teachers’ Retirement System of Louisiana alleged Siebel Systems’ board of directors gave Siebel, millions of stock options at or below market prices, rather than at a premium, as company rules required. The suit also claims that Siebel was given, under certain circumstances, more options than allowed under the stock option plan rules.
Following the November addendum, the suit further alleged the improperly issued stock options led to improper accounting that Siebel was aware of when he filed financial statements under the Sarbanes-Oxley Act.