Settlement of the suit by the Teachers’ Retirement System of Louisiana (TRSL) does not include any financial payments, Siebel General Counsel Jeff Armann told Reuters.
TRSL had accused the company directors of violating company rules for granting options, both by exceeding the cap set on the number of options it was allowed to grant, and in some cases issuing options at below market value without expensing the difference in price (See Siebel Systems Could Face Punitive Damages For Option Fiasco ).
TRSL also alleged that two separate proxy statements issued by Siebel Systems understated the number of options granted to Chief Executive Tom Siebel (See CEO Siebel Cancels Stock Options ) and didn’t reveal grants to directors, such as Charles Schwab, founder and chairman of Charles Schwab Corp.
Under the settlement, Siebel agreed to:
- add a new director to its board at the company’s next shareholder meeting and create and disclose more specific selection criteria for its board members
- increase the size of the compensation committee and limit it to independent directors
- expand the nominating and corporate governance committees
- limit the compensation of its directors to a pre-set level it will disclose in advance to shareholders and also disclose in advance the date on which directors will receive stock options
- disclose annually the value of options granted to directors and the company’s five highest-paid employees.